Government response to an independent report of the Money Advice Service, which recommended a shift away from financial education and that its generic advice budget be slashed, must consider the statutory status of the body, an influential committee of MPs has said.
The Treasury should consider the Money Advice Service’s future in the autumn when its response - following the formal response of the service itself - is published, according to Andrew Tyrie, chairman of the Treasury Committee.
Mr Tyrie was responding to Friday’s (20 March) publication of an independent review led by former National Association of Pension Funds’ chief Christine Farnish, which he had previously criticised for being precluded from considering the “crucial question” of its statutory status.
Mas has been asked to respond to Ms Farnish’s report, following which the government will consider its final actions in the autumn. The process has prompted criticism due to the length of time involved and because Mas is being given the opportunity to set out its stall first.
The panel of MPs has said the changes recommended by the report are so fundamental that the status of Mas as a statutory body, meaning it is established under law and enacts legislation on behalf of the government, must be reviewed.
The Treasury committee previously concluded that there was a lot wrong with the service, with a number of serious concerns raised about its effectiveness and value for money leading it to consider whether Mas should be abolished.
Ms Farnish’s report had suggested Mas should shift its focus more to debt advice and away from generic financial education, to avoid duplicating On the provision of advice, the services offered by other providers.
It recommended Mas’s £43m financial education budget could reduced by as much as half, that the service should work more with other bodies including regulators and the Financial Services Consumer Panel, and that it should consider awarding grants to help close the advice ‘gap’.
Ms Farnish stated that Mas “needs to reboot its business model”, adding that instead of competing as a public service provider in an already crowded market, the service should work on behalf of consumers to strengthen the supply of accessible consumer financial information and guidance.
Speaking to FTAdviser, Mas’ chief executive Caroline Rookes, said that the implied shift away from general financial education and to debt advice was actually a continuation of recent trends and was always likely to be the direction of travel.
She added that in the upcoming financial year the service was already shifting 20 per cent of its budget from financial education to debt advice.
A statement from the government read: “Any changes will need to be considered within the context of future plans and developments in the financial information and advice sector, including as a result of the government’s pension changes which are coming into force from April.”
Economic secretary Andrea Leadsom added: “Making sure that customers have access to high-quality financial education and advice is a key part of our long term economic plan.”