A trade association in the debt advice sector has responded to reports that the chancellor is about to scrap the Money Advice Service.
The Financial Times has reported that George Osborne will announce today (March 16) in his Budget speech plans to replace the MAS with a smaller outfit that focusses on frontline services for those in financial difficulty.
The government set the MAS up in 2010 to provide consumers with advice and financial education, but has repeatedly come under fire for effectively duplicating the work of Citizens Advice and consumer information and campaigning sites such as Moneysavingexpert.com.
This morning Kevin Still, chief executive of the Debt Managers Standards Association (DEMSA), said: “The chancellor’s decision comes at a critical time in applications by DEMSA’s members for full authorisations with the Financial Conduct Authority (FCA).
“Since the FCA took over regulation of consumer credit from the Office of Fair Trading in April 2014, the new Consumer Credit Sourcebook has been very clear on the requirement for commercial debt management firms to signpost indebted consumers to the Money Advice Service at the initial point of advice. This is also true for those firms leaving the market, which the Money Advice Service report on.”
He added: “There needs to be clarity and this needs to be communicated quickly, as 16,000 consumers have recently had their debt management plans terminated following the decision to not grant permissions to debt management firm PDHL. The primary guidance offered to these indebted consumers was for them to contact the Money Advice Service.
“The Money Advice Service acts as a gateway to a range of debt advice providers, including face-to-face advice and advice over the telephone. If the brand is removed, has all the investment in building public awareness around helping people in financial hardship been wasted?
“The Money Advice Service has literally just published research into a ‘picture of over-indebtedness’ in the UK. This confirms that 8.2 million consumers across the UK are over-indebted, which varies by geographical regions.”
Caroline Siarkiewicz, head of UK debt advice for the Money Advice Service, will be speaking on the Alternative Lending stream at Credit Today’s Credit Summit, in London, on April 7.
By Marcel LeGouais