16th March 2016
The Government’s Money Advice Service will be scrapped, George Osborne is set to announce in his Budget speech today.
The move is part of a wider review of Government-funded guidance services, launched alongside the Financial Advice Market Review last year.
Money Advice Service, was set up in 2010 to help consumers with all aspects of their finances and has been funded by a levy on the financial services sector.
However, it has been the subject of much criticism. In 2013, a report by MPs branded MAS “not fit for purpose” as a result of the “excessive pay” of its senior staff.
According to the FT, the Money Advice Service spent more than £100m creating and promoting its website and its former chief executive Tom Hobman earned £350,000 per year until his resignation in 2012.
Under the changes to be announced later today, it will be replaced by a much smaller body with a focus on providing “frontline” services to those in financial difficulty.
The review of guidance services was designed to reduce overlap between different bodies, but the final report from the FAMR this week urged the City watchdog to be more supportive of private companies wishing to provide guidance, rather than full advice, to customers.
A review published a year ago called for the budget of MAS to be cut back and for its main focus to be narrowed to debt advice.
Other Government-backed financial guidance services include The Pensions Advisory Service and Pensions Wise, which is run by Citizens Advice.
Money Marketing reports that, under a spending restructure by current MAS chief executive Caroline Rookes, its budget was set to be cut by £6m for 2016/17, from £81.1m to £75.1m. Rookes’ own salary was £200,000 lower than her predecessor Hobman, and other directors earning more than £200,000 have left.