The review, led by former chief executive officer of the National Association of Pension Funds Christine Farnish, steers Mas more towards working in the debt funding arena and being less focused on advice.
It recommends that the service should halve its Budget for financial education from a current £43m, which would reduce the amount of levies falling firms, in particular by reducing marketing. Large allocations to marketing have a particular bone of contention with the service in the past.
Suggesting that resources should be directed at advice ‘gap’ initiatives, the report recommends establishing a “budget for pump priming grants and service commissioning” to encourage development of products that “fill gaps or provide innovative ways of... informing consumers”.
Among a range of examples, the report cites “apps or ‘edutainment’ tools”, as well as “protocols to allow data to be shared and enable the development of personal finance management tools”.
The report also urges Mas that should focus its advice role on the establishment of a financial helpline for consumers to be promoted by retail financial services firms.
The Treasury said that Mas, along with the Financial Conduct Authority and the Financial Ombudsman Service, should coordinate “to ensure effective triage and a ‘one stop shop’ for consumer queries on financial matters where possible”.
Ms Farnish suggested that the FCA should make rules to require retail firms to promote Mas’ website, removing the marketing focus from Mas itself. The two organisations should coordinate more closely to make the financial information and debt advice markets work better.
She stated that Mas needs to reboot its business model. “Critically, instead of competing as a public service provider in an already crowded market, Mas should work on behalf of consumers to strengthen the supply of good, accessible consumer financial information and guidance.”
The review also recommended that Mas should work with industry sectors to simplify consumer information about products and help make features more comparable, suggesting that it commits to a small number of such projects each year to sustain momentum.
According to Ms Farnish, it should establish consumer-oriented quality criteria and a panel of independent experts, list providers on its website and explore the possibility of awarding good providers with a Mas quality mark.
On this latter point the government said it needed to consider and clarify the service’s statutory powers in this area. The Treasury added that it will review whether any further changes to Mas are needed, including possible legislative changes, publishing conclusions before the end of the year.
Caroline Rookes, chief executive for Mas, responded by saying that it has challenged the way they work. “All organisations need to evolve as circumstances change, especially new organisations such as ours.
“In addressing the money advice recommendations, we want to ensure that changes we make are genuinely in the interests of consumers and deliver value for money.
“So we will now work closely with the FCA, the financial services industry, consumer groups, the voluntary sector and other experts, to assess how the recommendations could be implemented in a way that would best benefit consumers and enhance the financial capability of the UK.”
Chris Hannant, director general at the Association of Professional Financial Advisers, said he was pleased the report picked up its suggestions about budget reduction, cutting duplication of existing private sector services and more proactive engagement with the financial services sector.
“Quite why we need Mas to review the report and then government to review that is beyond me; they need to get on with implementing these changes now.”
Daniel Godfrey, chief executive of The Investment Association, added: “We support the recommendation that Mas should focus on a role as co-ordinator and, where necessary, a commissioner of information and guidance across the universe of financial needs.
“There are already many commercial and not-for-profit providers and Mas should play the key role in ensuring comprehensive provision of high quality resources.”
ruth.gillbe@ft.com
