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Advisers’ MAS fees set to drop 93% under FSA plans

by Michelle Abrego on Jan 22, 2013 at 13:41

Advisers’ MAS fees set to drop 93% under FSA plans

The amount of money adviser firms pay towards funding the Money Advice Service (MAS) could drop dramatically from £4.6 million to £300,000 if Financial Services Authority (FSA) proposals get the green light.

Under plans published by the regulator funding would be allocated based on how consumers have used the website, telephone advice line and face-to-face services MAS offers.

The current funding system, which was introduced on a temporary basis when MAS was launched in April 2011, mirrors the funding blocks used to allocate FSA levies.

Under this system advisers pay around 10% of MAS’s £46.5 million costs.

If the changes go through, the total cost for firms in the fee block which includes advisers would fall 93% from the £4.6 million allocated for 2012/13 to £300,000, the FSA said.

The proportion this block funds MAS’s budget would drop from 9.9% to 0.7%.

The drop in the allocation reflects the fact only 2.6% of people using MAS are expected to get financial help and advice.

The FSA said: ‘The proposed allocation method affords a clearer link between how consumers use the service the MAS provides and which firms pay for it. The link is not perfect but it replaces the current allocation method that has no such relationship.’

Under the proposed system home finance providers and administrators will see the amount they pay towards funding MAS increase by a substantial amount, 1,309% from £1.1 million to £15.5 million.

In December last year MAS also announced that it was consulting on £2.5 million in cuts to its budget for 2013/14.

It proposed a total budget of £78.3 million for 2013/14, with £43.8m allocated to money advice and £34.5 million for debt advice. There will be no changes to the way debt advice costs are levied on banks, building societies and lenders, it said.

9 comments so far. Why not have your say?

Jonathan Kirby

Jan 22, 2013 at 14:20

Only 2.6% are asking for Financial Advice!

Is this not yet another case of something being set up at enormous cost without proper research into whether the service is required?

Beggars belief!

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Bob Donaldson

Jan 22, 2013 at 14:33

They would be better off giving all the people that want advice access to a straight forward website where they can then download a voucher which gives them free advice from a financial advisor in there area that is prepared to work with the scheme.

The advisor then cashes the voucher in providing the client signs it to say that it was worthwhile and they will act upon the advice given.

Winners all round. Client, advisor and the government.

Sorted.

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Christopher Petrie

Jan 22, 2013 at 15:04

It's becoming clear that MAS is basically a debt advice institution.

Fair enough I guess, maybe it could be called Citizens Advice Bureau. No, wait....

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Julian Stevens

Jan 22, 2013 at 15:19

Jonathan Kirby ~ You beat me (and probably many others) to it.

The RDR may well turn out to be another white elephant, that one of truly monstrous proportions. Never mind the cost, everybody else can be made to pay and if (or when) it all founders catastophically on the rocks of reality, we'll all be long gone and ensconced in ever better paid City jobs with banks or similar institutions.

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Adam Grant

Jan 22, 2013 at 15:37

I wonder if the other 97.4% of users were advisers getting annuity comparison quotes?

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Christopher Petrie

Jan 22, 2013 at 16:21

@ Julian Stevens - Why the RDR comment? This is about the MAS.

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Julian Stevens

Jan 22, 2013 at 16:35

Both have been ill thought-through, both are hugely expensive and the RDR may yet be a failure comparable to that of the MAS. See?

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phil castle via mobile

Jan 22, 2013 at 22:12

I agree with Chis Petrie's first comment.

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Michael Brown

Jan 23, 2013 at 09:57

Now can theFSA fees be set upon the same basis so that the IFA sector instead of increasing to £150M reduces to a £10m. 10% of the current fees?

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