Sajid Javid, financial secretary to HM Treasury, has confirmed the government will reveal the scope of a review of the Money Advice Service soon and, crucially, that the probe will be independent and not government-led.
In a letter to the Treasury Select Committee, Mr Javid confirmed the government will commission an independent review of Mas in response to widespread concerns from across the industry over its value for money and role.
Andrew Tyrie, chairman of the TSC, said: “Given the seriousness of the problems identified at the Mas during our inquiry, the Treasury Committee considered an independent review to be essential.
“I welcome the government’s change of mind. It now agrees that this review should be independent, rather than Treasury-led.”
Mr Tyrie called for the results of the review to be published no later than summer 2014, a far quicker turnaround than the original two-year estimate for the review. He said this urgency was required because Mas is being given a role in creating new financial guidance for pensioners under the Budget reforms.
Chancellor George Osborne announced changes that will give pensioners full flexibility over pension savings, including removing any effective need to purchase an annuity.
The changes, which remain subject to consultation and are planned to be introduced in 2015, will see pensioners offered “face-to-face” advice - described in Budget documentation as “guidance” - referred through their provider.
Mr Tyrie said: “Given that the Mas has now been asked by the Treasury to play a role in creating the new financial guidance for pensioners, it is even more important that the government gets on with it.
“Mas was not in a healthy state and some worthy attempts have now been made to reform it. The jury remains out on whether the Mas should be retained in its current form.
“The new leadership at the Mas have sought to reassure us that many of the problems identified in our report have been addressed. A central task of the review will be to assess whether we should continue to channel £80m or thereabouts each year through the Mas.
“We will pay close attention both to the terms of reference and to the conclusions of the review.”
An independent review comes as the FCA revealed five independent advisers responded to the regulator’s fees review stating they do not like paying for the Money Advice Service.
It was almost a year ago that the government announced it would assess Mas, which was tasked primarily with promoting “financial planning”, promoting “awareness” of various financial products and services, and proving debt services to the public.
The review was announced following controversy over the pay package of former chief executive Tony Hobman, who was paid £350,000 in 2011 including bonuses. He later resigned in 2012.