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Advice industry could see MAS fees cut 94%

  • 23/01/2013
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Advice industry could see MAS fees cut 94%
Advisory businesses will see a marked reduction in the amount they contribute to the Money Advice Service (MAS) in 2013/14 if proposed changes to the way it is funded are approved.

Currently, the amount specific Financial Services Authority (FSA) fee blocks contribute towards the MAS mirrors the proportion they pay towards the FSA’s periodic fees.

For 2012/13, this means adviser firms housed in the A.13 fee block paid a share of £4.6m, or about 10%, of the MAS’s £46.5m estimated annual running costs.

However, the MAS said this does not reflect how consumers use its services, and is proposing firms in the A.13 block should contribute a share of only 0.7% of its annual costs. Applied to the 2012/13 period, this would have meant the A.13 fee block paying £300,000 towards the MAS’s costs.

The MAS’s money advice budget for 2013/14 is £43.8m.

It said the proposed change makes a clearer link between how consumers use the service and who pays for it.

For example, a quarter of people who use the MAS either want to discuss homes and mortgages or use the service’s mortgage calculator.

Consequently, home finance providers and administrators would feel the brunt of the changes: whereas firms in this fee block (A.2) paid £1.1m towards the MAS for 2012/13, they would have paid £15.5m had the changes applied for that period. Fund managers would have seen an increase too, from £3.5m in 2012/13 to £4.6m.

The MAS raises two levies: a money advice levy and a debt advice levy. These changes would apply to the money advice levy only.

The changes, if agreed, would be implemented for the 2013/14 period.

The closing date for consultation is 22 February.

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