Advice body 'not value for money'

A body set up by Government to offer people help with their finances is yet to show it is achieving value for money itself, the public spending watchdog has found.

56c5219a-5d45-11e3-b6c9-0a0c0223000020131206T140124
The Money Advice Service spent £18 million on a recent publicity drive

A body set up by Government to offer people help with their finances is yet to show it is achieving value for money itself, the public spending watchdog has found.

The Money Advice Service (MAS), which gives free, impartial money tips, spent £18 million on a recent publicity drive including TV, radio and print media, building brand recognition through its "What does MA think?" campaign.

A report by the National Audit Office (NAO) said that while this raised awareness and prompted a 400% increase in visits to the MAS website, the service has not yet sufficiently reached out to those who need its advice the most.

The service has adopted a "digital first" strategy, meaning that it first encourages users towards its website. But the report said that evidence the website is meeting consumers' needs is "mixed".

Around four-fifths of consumers using the site said it met their needs, but the "bounce rate" of people leaving the site after only visiting one page has increased from two-fifths (42%) in July 2012 to half (50%) a year later, the report said.

It said that "mystery shoppers" who used the service's web chat facilities felt there were often long gaps between questions being asked and answered, possibly because advisers were working on more than one session at a time. The information given tended to be a link to a page of the service's website.

Despite more than half of the adult population now using a mobile phone to access the internet, the service has not yet come up with a mobile platform, the report said.

The report said: "In addition, an estimated 17% of households still lack access to the internet, which might mean that some of those in most need of money advice cannot access the service."

On Tuesday, the Treasury Committee called for the Government to commission an independent review into whether the MAS should continue to exist as a statutory organisation.

The call came after an inquiry into the MAS by the Treasury Sub-Committee found that the service is "not currently fit for purpose" and that an initial failure effectively to consult and build relationships with existing organisations in the sector resulted in it duplicating what was already being provided in the private and charitable sectors.

The service, which is funded by a levy on the financial services industry, was set up in 2010 in response to a review which estimated that 19 million people in the UK would benefit from generic financial advice.

The two main objectives the service was set are to enhance the public's understanding and knowledge about financial matters and their ability to manage their own financial affairs.

Its budget last year was £80.8 million, including £34.5 million allocated to its debt advice programme.

The NAO's report said that research conducted by the service shows that people trust it more than comparison websites, independent financial advisers and insurance companies.

But it continued: "However, unsurprisingly for a relatively new organisation, it is trusted less than MoneySavingExpert.com and Citizens Advice."

The NAO said the service is now "moving in the right direction" by starting to target resources at the areas of greatest need. The service estimates that over two million consumers used its website in 2012-13, and 195,000 accessed its phone, webchat and face-to-face money advice channels.

The report also said that while the MAS's provision of generic money advice is not yet found to be achieving value for money, its provision of debt advice to consumers has achieved value.

The service took over responsibility for commissioning face-to-face debt advice from the Department of Business, Innovation and Skills in 2012 and the NAO said it has improved the standards of advice throughout the sector. The service provided 158,000 face-to-face debt advice sessions in England and Wales in 2012/13, marking a 58% increase on the previous year.

MAS chief executive Caroline Rookes said: "We are very pleased that the National Audit Office has found that our debt advice work is delivering value for money, with a 50% increase in advice provided and an improvement in quality without any increase in cost.

"We also welcome the NAO's finding that our money advice work is moving in the right direction.

"With over 300,000 visits to our service each week, 85% satisfaction ratings and nearly 200,000 people taking steps to improve their money management in the first quarter of 2013/14, we are making real progress in helping people to manage their money.

"Money advice is crucial in helping people make the right choices with their finances.

"We are pleased that the NAO has recognised this, has acknowledged that we are meeting that demand for advice, and that we are increasingly targeting those most in need."

She added: "We look forward to working through the recommendations in the months ahead and using them to further improve our service, and as a result, provide long-lasting help to our customers."