One of the Budget announcements was that of the disbanding of the current Money Advice Service, but what will be the impact on consumers and financial institutions?
One of the seemingly minor Budget announcements was that of the disbanding of the current Money Advice Service (MAS). MAS, rebranded from the title of the Consumer Financial Education Body, is an independent body set up by the government in 2010 as a result of the Thoresen Review into generic financial guidance. It was designed to overview the financial capability of UK citizens through the provision of free, unbiased advice across the UK – online, over the phone and face-to-face – and through performing a central role in the coordination of debt advice.
In March 2015, a Treasury report entitled 'Review of the Money Advice Service' made recommendations designed to respond to the discovery that relatively few had heard of or used the service. For example in the year 2014/15, MAS estimated that 220,000 people would use the service [PDF] whereas they estimated that between 3 to 9 million people (a broad estimate range!) were ‘struggling with problem debt’. Recognition was made of the difficulties of uncertainty that MAS had faced due to multiple reviews and audits, however the review revealed that MAS duplicated activities and information available across the sector and sought to make recommendations in changing its role.
Interestingly, there is reference to the National Audit Office finding that 52.2 % of people would turn to their bank or building society in order to go for money advice if unprompted. It would seem that there is existing public trust in these institutions and scope for them to provide real consumer benefit in this way. The Treasury report concludes that the MAS could become future-fit through focussing on being a strategic hub.
And so to the Budget. MAS is to be abolished and restructured, as are two other government-backed sources of advice: The Pensions Advisory Service (TPAS) and the Pension Wise. A fresh consultation called the Public Financial Guidance Consultation is to take place which will consider how the revised delivery model is to be structured with an intention that this will be in place within two years. In the meantime, the three affected organisations will continue, although it would be arguable as to whether this would be with a lesser degree of uncertainty than previously enjoyed.
Management students would do well to watch the process as a case study of managing change and retail students should scrutinise the reviews and findings to consider whether financial institutions and consumers are affected in any way by the proceedings.