Is there an alternative solution to the Government’s £80m Money Advice Service?
You can find my story on the damning report here. The MPs’ view is interesting. We all recognise the importance of financial education and debt advice, but the Money Advice Service has been criticised for not delivering that and, instead, wasting money on marketing and an expensive re-branding exercise (as well as overpaying its staff).
The funding for the service comes from the financial services industry in the form of a levy that financial firms and advisers must pay. Does that give them a stake in deciding what should happen to the service? I reckon so.
Some are outrightly dismissive of it. Alistair Cunningham, an adviser with Wingate Financial Planning says: “I fail to see the need for such a service, not least its £80m annual budget.”
Here he explains why…
“Broadly speaking individuals fall into three categories: (1) Those who on lower earnings or benefits, who are best advised to: spend less than they earn; pay down debts usually starting with the most expensive. (2) Those with significant assets, often a combination of pensions and investments, who are overwhelmed by the options and choices available to them. And (3) Those who have the ability and wish to save, have paid off costly unsecured debts and would like to understand how to make financial plans.
“For those in the first category; I have nothing but praise for the not-for-profit Citizens Advice Bureau and also believe good “no charge” guidance is provided on the profit-making Money Saving Expert*. The Benefit Enquiry Line is also an excellent Government-run service.
“Those in the second category should seek good quality advice from an independent financial adviser or at least one who has access to a representative range of the market (in other words: not banks or tied agents). This adviser should be professionally qualified to an appropriate level; the highest-recognised in the UK is Chartered Financial Planner.
“The final category of people may not need any advice, especially with the introduction of workplace pensions and simple, tax-free investments such as ISAs. But for those who do want advice Wingate (and we are not alone) would charge £600 for a comprehensive financial plan.
“I believe that we provide significant value for the money to many people, and if similar firms in Britain were paid by the Money Advice Service to deliver such a service to the public we could improve the knowledge and financial well-being of 100-150,000 people each year. That would be lower than the 1.7m the Money Advice Service claims to help each year, but I think changes would be more meaningful. After all, how much difference does an online tool, or phone call make to someone’s life?”
Interesting views. What do others think?
* Money-Saving Expert was recently sold for £80m. That’s the same amount that the Money Advice Service has as its budget every year. Maybe the Government could have done better buying Money-Saving Expert! (Thanks to Greg Kingston of Suffolk Life for the thought)
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