The Treasury Select Sub-Committee of the House of Commons has made a number of criticisms of the Money Advice Service (MAS), the body that was set up by the Government to offer general advice on financial matters to the public.
In publishing its report, the Select Sub-Committee said that the MAS was currently “not fit for purpose”, but that it would wait until the conclusions of a Government review, expected in 2015, before deciding whether to recommend that the organisation is scrapped.
The Committee criticised the fact that only a small part of the annual MAS budget of around £80 million is spent on service delivery. It commented that large amounts had been spent on marketing instead. It went on to say that the MAS duplicates many services that are already available in the private and charitable sectors and questioned whether the Financial Conduct Authority (FCA) should be given powers to hold it to account.
It was also remarked on that MAS chief executive Caroline Rookes earns a base salary of £140,000, while strategy and innovation director Mark Fiander and marketing and service delivery director Karen Broughton both receive £160,000 per annum.
Committee chairman George Mudie MP commented: “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.”
He went on to suggest that the future of the MAS itself is in doubt. “In finalising this report, the committee considered carefully whether to recommend that the MAS be scrapped completely. Given that the Treasury had already announced its intention to conduct a review of the MAS, we were persuaded to grant a stay of execution” Mr Mudie added.
Ms Rookes responded by saying: “The MAS is fit for purpose. The committee’s findings are largely based on evidence taken well over a year ago. Since then, we have, with the FCA, appointed a new chairman and chief executive, and changed the direction of the organisation to focus much more on working with partners to help customers. What is more, we have already done much of what the committee recommends.”
The news may be welcomed by many financial advisers, who dislike having to fund the MAS when it could potentially be seen as offering a competing service. But some members of the advisory community have cautioned that the Treasury committee previously recommended a delay in the Retail Distribution Review reforms to the financial advice market, but that the Government disregarded this opinion.
A few days later, the National Audit Office also criticised the MAS. In its document “Helping consumers to manage their money”, it said that the debt advice arm of the MAS was working well, but that the money advice arm was not. It questioned whether the MAS was making sufficient use of its face to face and telephone advice offerings, noting that 97% of customer contact with the MAS is made via the website.