The Money Advice Service will be scrapped in favour of a new delivery model merging the functions of The Pensions Advisory Service and Pension Wise.
Chancellor George Osborne has decided to replace Mas with a much smaller body to focus on providing “frontline” services to those in financial difficulty.
HM Treasury released a follow-up to its October consultation on how publicly funded pensions guidance, debt advice and money guidance could best be restructured.
The new consultation into the proposed delivery model is seeking industry views by 8 June.
Proposals stated a new pensions guidance body will be charged with making sure consumers can get all their pensions questions answered in one place, incorporating the functions currently provided by Tpas, Pension Wise and Mas.
A slimmed down money guidance body will be charged with equipping consumers to make more effective financial decisions by:
• Identifying gaps in the financial guidance market;
• Commissioning targeted debt advice, money guidance and financial capability projects or services to fill any gaps identified;
• Providing funding to third parties to deliver these projects or services.
A partnership agreement will sit between the pensions guidance body and the money guidance body to ensure that consumers who need broader financial guidance on both pensions and money issues can be directed to the right places, read the consultation.
Links between the two bodies will be strengthened by cross membership of boards so that the business strategies can be aligned.
The document also confirmed the new bodies will be funded by levies on the financial services and pensions sectors.
“By removing duplication and reducing overheads, the new delivery model will allow more funding to be channelled to the front line, while also reducing the burden on levy payers,” it added.
“The government wants to make sure that the new delivery model improves consumer experience, so welcomes views on how to set up and evaluate the services provided so that they are of most value to the consumer.”
The government will publish a final response in autumn 2016.
Mas, an industry-paid for body designed to give guidance to consumers on their finances, had faced strong criticism for its spending habits.
Set up in 2010, it was funded by a statutory levy on the financial services industry, which many advisers felt was a waste of their money, arguing the help it offered consumers with budgeting and choosing financial products was already available from charities or private sector websites.
It was denounced by MPs in a hard-hitting report in 2013 as “not fit for purpose” after it awarded what they alleged was “excessive pay” to its senior staff.
Mas spent more than £100m on developing and promoting its website, according to an independent review of the service carried out by financial policy veteran Christine Farnish, published last March.
Former chief executive Tom Hobman was paid £350,000 a year, before he resigned in 2012.
Steven Cameron, pensions director at Aegon said: “With the chancellor under increasing pressure to make savings and the private sector set to offer guidance options between full advice and no advice, the outlook was ominous for Mas, especially with so much duplication from other consumer pension guidance services.
“The Financial Advice Market Review is encouraging the private sector to fill the advice gap with new guidance models, and from a pensions perspective, there’s arguably a more natural connection between pension firms, advisers and their customers, than there is to separate public bodies.
“This may explain why Mas has incurred high costs raising awareness of its services,” he added.
