The Treasury-commissioned review by former National Association of Pension Funds chief Christine Farnish said the body will have to “embark on a programme of transformation” to reposition itself over the next two to three years.
Under current “weak” arrangements it is not possible for those who fund MAS – retail financial services firms – to have a “meaningful voice” on how their funds are spent or the value for money of MAS’s work, the report stated.
The MAS currently has a budget of £81.1m – £38m for its debt advice arm and £43m for its money advice arm.
Farnish’s report suggested the money advice budget should be run on between £20m and £25m under the new business model.
MAS’ staff would be cut from 130 to about 50-70 permanent staff, plus those manning a new financial helpline.
A “significantly reduced need” for MAS to fund marketing, promotion and partnerships, for which it has a current budget of £15.2m, development and provision of advice, £17.9m, and savings on running costs and overheads, currently £35.8m, will form the basis of the cuts the report said.
Financial advisers have long called for more say in how MAS spends the money they provide it with.
Industry consultation on MAS’ budget is included as a small part of the FCA’s annual broader consultation on regulatory, Financial Ombudsman Service (FOS) and Financial Services Compensation Scheme (FSCS) levies.
“This review has picked up concerns about MAS strategy, business model and costs and a degree of frustration about MAS’s willingness to listen and the ability of stakeholders to influence both the direction of travel and priority areas of work,” the report said.
“The review believes that the current accountability regime is weak and that it would benefit from being strengthened.
“We do not consider that it is possible under the current arrangements for any party to hold MAS fully to account, either for the way it discharges its role or for the monies it spends.”
In the short term, the review proposes that MAS consult “in a more meaningful way” on its strategy and business plan, fully engage with all relevant parties and demonstrate that it listens to feedback.
The financial services industry that pays for MAS should get special attention, and MAS should publish more transparent information to enable closer scrutiny of its annual expenditure, performance and effectiveness, the review said.
But in return the review recommends that the FCA should make rules to require that financial services firms signpost customers to the MAS website and the helpline.
Caroline Rookes, chief executive for the MAS, said the service will now work closely with the FCA, the financial services industry, consumer groups, the voluntary sector and other experts, to assess how the recommendations could be implemented, “in a way that would best benefit consumers and enhance the financial capability of the UK”.
The MAS will submit a proposed action plan to the government in the autumn.
