In a report published today, the Treasury Committee has called on the Government to commission an independent review, to be completed no later than summer 2014, looking at whether the Money Advice Service (MAS) should continue to exist as a statutory organisation.
The Chairman of the Sub-Committee, George Mudie MP, commented:
“The Money Advice Service 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
“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.
“We have asked the Government to expedite this review as a matter of urgency. We have also recommended that it should be independent, rather than led by the Treasury.
“The review must assess whether the MAS should continue to exist and, if so, how it can overcome the serious problems laid bare in this report. Its findings should be available for scrutiny by the Treasury Committee and others by the summer of 2014. Only then can a credible, informed decision on the future of the MAS be made.
“We also expect the current management of the MAS to study our report and to tell us how they are going to act on the concerns we have identified.
“People up and down the country, particularly at this time, need access to high quality money and debt advice. If this is to continue to be facilitated by a public body, a radical overhaul is needed.”
The Committee recommended that the independent review it is calling for should seek to answer the following questions:
- Should the Money Advice Service—or something like it—exist as a statutory organisation?
- If so, what should the role and strategy of such a body be? Should it be a co-ordinator, commissioner or direct provider of advice? What channels should it use?
- If not, should the FCA take responsibility for the objectives of the Service?
- Does the FCA need greater statutory powers to hold the Money Advice Service to account?
- What are the views of other bodies in this sector about the way in which the Money Advice Service is now engaging with them?
- To what extent does the work of the Money Advice Service unnecessarily duplicate existing provision? What should the role of the Service be in each of the areas in which it operates?
- Is the remuneration of the Service’s senior staff set at an appropriate level?
Some of the Committee’s key conclusions and recommendations include (a full list can be found on pages 33 - 36):
- The very large amounts that have been spent on marketing in the Service’s early years suggest that the strategy to build a separate brand, and in particular to rebrand as the Money Advice Service when the 'money made clear' brand was already in use, was misguided. (paragraph 38)
- We recommend that during difficult economic circumstances such as those following the financial crisis of 2008, the Money Advice Service’s resources should be focused on helping those in crisis. Funds may therefore need to be reallocated from money advice to debt advice. [...] We recommend that the Service be given greater flexibility on the proportion of its budget that it spends on money advice and debt advice respectively, responding to changes in demand.” (paragraph 41)
- When seeking to increase productivity, the Money Advice Service must be mindful of the need to maintain the quality of the service it provides. The Committee is sceptical that productivity can have been increased by 50 per cent in a single year without some resulting reduction in quality of service. [...] We recommend that the Money Advice Service establish a working group, composed of representatives from the debt advice sector, to agree a set of service standards for debt advice and a strategy for achieving those standards. (paragraph 43)
- The initial failure effectively to consult and build relationships with existing organisations in the sector resulted in the Money Advice Service duplicating what was already being provided in the private and charitable sectors. (paragraph 55)
- The Money Advice Service should work with providers of financial education in schools and with the Department for Education to establish standards to be met by all providers. We also recommend that the Service should provide funding from its existing budget for the training of teachers to deliver financial education in schools, in addition to the funding already provided by the private and voluntary sectors. (paragraph 63)
- It is clear that the FSA’s Board believed that it did not have sufficient powers effectively to hold the Money Advice Service to account. (paragraph 70)
- In appointing a new Chief Executive on a salary considerably lower than that of her predecessor, the Money Advice Service, the FSA and the Treasury appear to have recognised that the remuneration of the former Chief Executive of the Money Advice Service was excessive. [...] We regret, however, that the decision to reward the previous Chief Executive so excessively was taken in the first place and that two members of staff continue to be paid more than the current Chief Executive. These decisions risk undermining the credibility of the organisation. (paragraph 75)