In the 2016 budget report, the government announced that it intends to replace the Money Advice Service (MAS) over the next couple of years. Since then, HM Treasury has published a consultation paper which sets out how it plans to do this.
In addition to MAS, free-to-client financial guidance is currently provided by the Pensions Advisory Service (TPAS) and Pension Wise. The new delivery model will:
- Replace MAS with a new slimmed down money guidance body. This will be charged with equipping consumers to make more effective financial decisions by:
- Identifying gaps in the financial guidance market.
- Commissioning targeted debt advice, money guidance and financial capability projects or services to fill any gaps identified.
- Providing funding to third parties to deliver these projects or services.
- Merge the functions of TPAS and Pension Wise to create a new pensions guidance body. This will be charged with making sure consumers get all their pensions questions answered in one place. As well as incorporating the functions currently provided by TPAS and Pension Wise, it will also incorporate some pensions guidance provided by MAS.
A partnership agreement will sit between the pensions guidance body and the money guidance body to ensure that consumers who need broader financial guidance on both pensions and money issues can be directed to the right place.
The new pensions guidance and the new money guidance body will be funded by levies on the financial services and pensions sectors. By removing duplication and reducing overheads, the new delivery model will allow more funding to be channeled to the front line, while also reducing the burden on levy payers.
The government wants to make sure that the new delivery model improves consumer experience, so welcomes views on how to set up and evaluate the services provided so that they are of most value to the consumer. Consultation questions are included in Section 2 of the document. The consultation closes on 8 June 2016 and the government will publish a final response in Autumn 2016.
Legislative changes are likely to take 6-12 months and the government would like to allow a reasonable transition period. Therefore, the earliest date the new model may take effect is April 2018. In the meantime, MAS and the other affected organisations will continue to provide guidance to consumers for at least the next two financial years.