Budget 2016: Money Advice Service to be scrapped
MAS was heavily criticised by MPs
The Chancellor is to scrap consumer guidance provider the Money Advice Service (MAS) in today's Budget, according to reports.
George Osborne is to announce he will replace the MAS with a much smaller body with a focus on providing 'frontline' services to those in financial difficulty - currently the focus of its debt advice arm - according to the FT.
MAS was set up by the government in 2010 to provide consumers with "financial education and advice" but has since come under strong criticism over the execution of its role.
MPs said in 2013 the service was "effectively duplicating" other services such as the Citizen Advice Bureau and Moneysavingexpert.
A Treasury-commissioned review led by former National Association of Pension Funds CEO Christine Farnish concluded last March that the MAS needed to "embark on a programme of transformation" away from its focus on money guidance provision.
The review suggested MAS' money advice budget should be run on between £20m and £25m under the new business model and its staff cut from 130 to about 50 to 70 permanent staff.
Advisers, who contribute to the running cost of the MAS had long criticised its failure to provide value for money.
It is believed the Chancellor agrees with MAS critics.
In 2015/16 advisers contributed £4.2m towards the running of the MAS, 16% more than in the previous year, when it was £3.6m.
Following the Farnish report, MAS developed a new three-year corporate strategy, putting an emphasis on working with partners to encourage people to engage with their money and improve their financial capability.
In its business plan for the coming year, MAS proposed to cut its budget allocated for money advice from £34.1m in the current year to £30.1m in 2016/17, while its debt advice allocation stays the same.
The body proposed to allocate less than half (41%) of its money advice budget on customer engagement and direct services, whereby its marketing budget has been cut by half, from almost £9m to about £4m.
MAS also launched a ten-year financial capability strategy earlier this year, seeking to improve people's ability to manage their finances and educating them in the difference between financial advice and guidance and to make them understand when they need advice and how to get it.
This is done in cooperation with industry partners and has so far been lauded as one of its more successful initiatives.
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