The Money Advice Service appears to be overly expensive and providing a redundant service that duplicates that already available in the market making it unlikely it will be effective in filling the ‘advice gap’ for mainstream consumers, a panel of MPs has stated in a damning report.
In a report published today, the Treasury Select Committee cast doubt on the objectivity of a two-year review initiated by the Treasury and instead called for an independent review of the Mas, to be completed as early as next summer, arguing it duplicates existing services and is not value for money.
Earlier this year it emerged that advisers could face a 63 per cent hike in the levy paid to fund the Money Advice Service if proposals by the Financial Conduct Authority were to go ahead.
Mas’s core budget for the 2012-2013 financial year rose 6 per cent to £46.3m, with £20m earmarked for marketing alone. A further £40m budget has also been set aside for the service to offer extended debt advice services.
According to the TSC report, one of the primary functions of the Mas was to provide advice to mainstream consumers, particularly following the introduction of the Retail Distribution Review which it says has created an as yet unquantified ‘advice gap’.
However, between free-to-use websites and regulated advisers, many that gave evidence to the committee said the service brings nothing to the table not already available. Moreover, Mas is criticised for not constructively engaging with these services and wasting money on a major branding campaign to effectively compete with them.
Martin Lewis of Moneysavingexpert.com said: “The so called advice gap won’t be solved by adding another website to an already crowded marketplace.”
Gillian Guy of the Citizens’ Advice Bureau suggested Mas might be put to better use in a support role for existing services rather than one on the front lines, saying: “We do not really need another telephone service and we do not really need another web service. We need capacity within existing services.”
Sub-committee chairman George Mudie said: “The Mas is not currently fit for purpose. It is far from clear that it has adopted the right strategy or even that it is performing the correct role.
“People up and down the country, particularly at this time, need access to high quality money and debt advice. If this is to continue to be facilitated by a public body, a radical overhaul is needed.”
Mr Mudie added that the government should even consider whether the Mas should continue to exist as a statutory body or should be scrapped altogether.
The Treasury is already conducting its own review of the Mas, but Mr Mudie called for a second independent review which would report its findings next summer, a full year ahead of the Treasury.