A report has criticised the government funded Money Advice Service as being “unfit for purpose”.

The reports state that a number of factors have meant that the service cannot properly serve those it is supposed to.


A Treasury Select Committee felt that the service was lacking the ability to provide a service to a level that is acceptable, to the extent that they were ready to shut down the service – the only saving grace was the fact that an investigation had already begun.

One of the major criticisms of the service was the high levels of pay received by executives.

The Independent states that the former chief of the service, Tom Hobman, had received a paycheck of £350,000 per year, a much higher salary than he had received in a similar non-governmental regulator role.
To put this in perspective, it is £100,000 more than is received by the Prime Minister, the man who makes the most important decisions in the country.

Many would feel this is an excessive amount to be paid, particularly in a not-for-profit organisation and especially for one that exists to provide advice and support to those with money troubles that can ruin lives.

Right Time, Wrong Place

Another criticism of the service was that it is primarily web-based. This meant that its services are much harder to access for those who do not have the necessary computer skills or a home broadband connection, even though internet access is available in most homes.

Less than a week ago, the Money Advice Service published a report into individual levels of debt. This looked at the various circumstances of those that were likely to be in debt, and also asked the question of how best it was to reach the different categories of those in debt.

The findings showed out of all options, people of all ages and levels of debt, most people want to have face-to-face advice to tackle any money problems.

The Money Advice Service itself does not have a physical high street presence; instead anyone wanting a face-to-face consultation will be sent to a meeting with an adviser at the Citizens Advice Bureau (a charity).

Proper Supervision

Another consideration was whether to hand over responsibility for the organisation to the FCA (Financial Conduct Authority). The FCA are assuming responsibility for larger areas of the consumer facing financial institutions (such as payday lenders) as of next April (2014). They have the power to create legislation, investigate institutions and enforce laws already in place to regulate the financial services industry.

Our trained staff are here to help you work out what’s right for you. Whatever your question we’re here to help and, if we don’t know the answer, we’ll point you in the right direction to someone who does. No problem or question is too small – try us and see.

We’re not regulated by the Financial Conduct Authority so we can’t give you a specific recommendation on whether a particular product is suitable for you. If you need regulated financial advice, you’ll need to consult a professional financial adviser.” – Money Advice Service

This extract from the Money Advice Service website shows the problem.

If you contact them with a problem or question relating to a decision you are looking to make that will affect your finances, they cannot give you any concrete advice.
This seems to negate the need for “trained staff” and questions the real-life value of the advice that they do give.


Looking back to the website quote, to contradict their initial purpose even more, they state that users may have to consult a professional financial adviser. This is likely to be at a cost well out of the reach of someone who is already experiencing money problems, and therefore questions the effectiveness of offering a service that is free to use.

People will appreciate that there is free advice available; however many may feel disappointed that the information they receive is unable to be relied upon and could feel uneasy about using this advice.

Sensible Spending

It was also shown that the Money Advice Service paid £20m in communications, advertising and marketing over 2012-2013. It is unclear whether this was over 2 years or a period including both, but assuming it was paid in 1 year, this equates to a quarter of its budget – £80m per year.

As a result, the Treasury Select Committee questioned the extent of the spending.

This is obviously a huge amount to spend; many private companies will not have this amount to spend on promotion.

There is no doubt that people need to know the service exists before it is able to help them, however you may expect more widespread acknowledgement of the service for the amount being spent.

By the service’s own admission there are millions more people who need the advice but are currently not getting it, which cast doubts over the effectiveness of their plan.


This report by the Treasury Select Committee paints a disappointing picture of the Money Advice Service.

It should be pointed out that most of this information is over a year old, and in the time between the report being put together and being released changes have been made.

In Part 2 we’ll take a look at the other options available to those looking for financial advice.