To be published as HC 271

House of commons



Treasury SUB-Committee

money advice service

Wednesday 13 June 2012


tracey bleaklEy, otto thoresen and martin lewis

Evidence heard in Public Questions 1 - 87



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Oral Evidence

Taken before the Treasury Sub-Committee

on Wednesday 13 June 2012

Members present:

Mr George Mudie (Chair)

Michael Fallon

Mark Garnier

Mr Andrew Love

Mr Pat McFadden

Teresa Pearce

John Thurso

Mr Andrew Tyrie


Examination of Witnesses

Witnesses: Joe Garner, Chair, Financial Services Practitioner Panel, Adam Philips, Chair, Financial Services Consumer Panel, Delroy Corinaldi, Director of External Affairs, Consumer Credit Counselling Services, and David Hawkes, Advice UK, gave evidence.

Q1 Chair: Good afternoon. Thank you very much. Sorry we are slightly late. I apologise in advance because there is a very important vote at 4.00pm and we have two panels, so I have asked the members-I fear it is an impossible task-to be brief, but I would also ask you if you could be brief. I am sorry about trying to squeeze you all in. If any of you find that you want to go further on a point we would be delighted to hear from you, and I would even be open, if collectively you thought we had not done you justice, to ask for more time later on again. We would be very happy, because we have had some very interesting written evidence, and I am sure you are going to add to it. Mr Tyrie is starting.

Mr Tyrie: Could I start with you, Mr Philips, and perhaps others can chip in. Do you think that the decision of the FSA to go ahead with the RDR has created an advice gap, as many put it, as big as people say, and do you think that there is anything that can be done about it?

Adam Philips: I think the first thing to say is that there has always been an advice gap. It has become more important as people are expected to take more decisions about their financial health and, in particular, about saving for their retirement, for their old age. There is no doubt that the RDR has affected part of the market because in bringing in transparent charges and clear professional standards it will have the effect of withdrawing a certain kind of advice from the middle part of the market. However, our view as a panel has always been that that is a space that can be better filled by a different kind of business model. I think our view is that whenever the RDR finally goes through, or went through, there would be a change but that the problem it would create already existed and it had to be addressed in any case. It cleans up the market, in other words.

Q2 Mr Tyrie: Can the Money Advice Service play a role?

Adam Philips: I think they definitely play a role. We did research five years ago, talking about the initial consultation on the RDR, where we said it was essential that generic advice was brought in if the RDR was to go ahead, simply to deal with this issue.

Q3 Mr Tyrie: Can you elaborate in a little more detail how you think it could help?

Adam Philips: The key issue is that people who have limited amounts of money find it difficult to justify the cost of full service advice. There are two possible ways that that demand could be met. One is that the industry moves to a more efficient business model where they can provide advice more cheaply, and we pressed on the idea of simplified advice. The other approach is that financial education and generic guidance are made available to people to help them choose the sorts of products that they should be choosing without actually selling to them. That is not regulated advice. Our view was that the CFEB operation would provide a catalyst and a service that would help to fill that middle part of the market.

Q4 Mr Tyrie: Would others like to add anything to what has been said?

Joe Garner: I think I should reflect that there are different views on RDR within the Practitioner Panel. Everyone is united around the objectives and absolutely supports the objectives. Some see it as leading to a withdrawal of advice from some segments; others see it as an opportunity and are investing in that space. So there are different views, but it is very early days, and I think what is important is to take a review a bit further down the track and see what has happened.

Q5 Mr Tyrie: Were you as concerned at the start about the size of this gap?

Joe Garner: Yes.

Q6 Mr Tyrie: And about the risk that RDR would pose to it?

Joe Garner: Yes. That is my view.

Mr Tyrie: Any other comments? No.

Q7 John Thurso: Can I just come back to you, Mr Philips, and pick up on one comment. You talked about people with limited budgets who do not see the point of or cannot afford a full service. To what extent should there be a number of very simple, "it does what it says on the tin" financial products that do not need either generic or regulated advice, because they do precisely what they are meant to do, to deal with precisely those people?

Adam Philips: I think it would be a very good idea. The panel has done research in this area. We have been actively pursuing any kind of consultation group, workshop, whatever it may be, and indeed in extended discussions with the Treasury about the opportunity that this change creates, and the need to bring products into this space.

Q8 John Thurso: I just wanted to be clear that it is not an either/or generic advice or "does what it says on the tin" products?

Adam Philips: No.

Q9 John Thurso: They go together. Thank you very much. Mr Hawkes, could I come to you and just ask the question to what extent is generic financial advice, as opposed to regulated advice, useful to individuals? How do individuals perceive the difference?

David Hawkes: It certainly is useful. There are low levels of knowledge and understanding and so there is definitely a role in generic financial advice. I think it needs to be part of a whole package though, what we call like a "whole person" approach so that you are looking at generic financial advice as part of a preventative agenda in addition to debt advice as part of crisis intervention.

Q10 John Thurso: I know this is a slightly difficult question, because I am asking you to quantify the unquantifiable, but how great is the need? How much do we need to address this and ensure that this type of advice is available?

David Hawkes: I think there is definitely a need but it depends how you look at it, what sort of timescales you are looking at. In terms of immediate need, then I think the immediate need is for crisis intervention-that is to say, debt advice-but there is clearly a need to reduce the demand for debt advice, and therefore preventative work has a very important role to play in that.

Q11 John Thurso: Can I come to you, Mr Corinaldi, and ask do you think the general public understand the difference between generic advice and regulated advice, or do you think this is a sort of pretty alien concept to them?

Delroy Corinaldi: Again, I think it very much depends who you ask. Certainly, for the individuals we are in regular contact with who need debt advice, they are in the situation David has just pointed out; they are in that crisis zone. When they are in that crisis zone and they feel like bricks are falling on their heads, what they want is help. I think they associate advice and help as being one and the same, and what they look for is a trusted advisor to take them through that. Therefore it is important that we have organisations like MAS with a co-ordinating role in that space but also organisations like ourselves and Advice UK and Citizens Advice providing some level of advice to take them through that difficult period in their lives.

Q12 John Thurso: Do you think that the public might be frustrated by the limits of MAS?

Delroy Corinaldi: It presupposes the additional question, to what extent do the public know about the Money Advice Service? I think the Money Advice Service can have a role, if I may answer it in this way, as a co-ordinating force. It can look at filling in the gaps, but it has that role if it works with the organisations that are in the space and are effective at the moment. You have organisations like Advice UK and ourselves that see 1,000 people a day who are struggling with debt difficulty, who are working with creditors, who are not funded through the taxpayer, or who are honest brokers trying to get them out of a crisis situation and back on their feet. I think MAS, as an organisation, has a role that can fill the gaps, should be looking to promote the free debt advice sector and it should be looking to work with providers like ourselves that are very effective.

Q13 Mr McFadden: I will come back to you, Mr Philips. The Money Advice Service targets 19 million people, we are told. By my rudimentary arithmetic, that is around a third of the population. Do you think that is a reasonable estimate of the number of people who need hands-on money advice?

Adam Philips: It might even be an underestimate of the number of people who need advice. We come back to the issue about when people need advice. When you are young you need guidance and education about how to deal with money. I think as you get older there are particular issues, for example getting married or having a family, where you need to start thinking about protection, and then as you get older still you need to begin to think about your retirement and decumulation. At various points in those periods you may well need face-to-face or some kind of human interaction with somebody to help talk you through your particular issues. For much of the rest of the time you will have questions, and sometimes those questions will be answered by a leaflet or a brochure and sometimes they will be very specific. As I look at the Money Advice Service, they believe that they can answer most of those questions online. I would question whether that is the case, but I think they could do a lot more in that space, given time.

Q14 Mr McFadden: Is it realistic for any organisation to think they can offer advice to a third of the population?

Adam Philips: I think that if you look at any kind of mass-marketing organisation it is something that they aspire to do. Let’s take teaching people to drive; I guess roughly a third of the population has a driving licence. I think it is quite conceivable to do that. In order to do that you have to be very carefully targeted and focused and clear about what you are trying to achieve. Where I would agree with the general line of your questioning is that I think that target group is very unfocused. They need to be much clearer about what they are trying to achieve with more limited objectives.

Q15 Mr McFadden: That is what I was going to ask you. Putting it simply, are you in favour of this broad, very wide target, or do you think that that is too wide and they ought to be targeting the most vulnerable groups more?

Adam Philips: I think they ought to be focusing down within that group. There are clear groups of need of which we have heard one, the people who need immediate help now, but there are a lot of people who need some kind of advice. I think the issue for us, or certainly the panel, is about the effective use of the resources they have, and that requires more focus.

Q16 Mr McFadden: What proportion of the population do you think have heard of the Money Advice Service?

Adam Philips: I have no idea, actually. It is a question you should ask them. They do collect figures on awareness, but I am not sure where they have got to now.

Q17 Mr McFadden: Let me move along a little bit; Mr Corinaldi first, I think. If we are talking about targeting, one of the areas we might think about is young people and financial awareness in schools. Do you think the Money Advice Service should try to be more active about educating people on money matters before they leave school?

Delroy Corinaldi: I think financial education is a good thing. I think the Money Advice Service needs to be involved. Just as in the debt advice space, the question for the Money Advice Service is to what extent it needs to deliver these services itself and the extent to which it needs to work with charities that are already well known, that are already working in this space, and that can also deliver that advice.

If I can narrow it into the debt advice world, which is where we are, and talk about it a little bit, we are a national charity. We deal with people all around the country, and what we find is that people want help, and they want it early. They want to work with trusted organisations. Citizens Advice, the Consumer Credit Counselling Service and Advice UK are organisations that fit into that trusted brand. I think the Money Advice Service needs to find that mechanism of engaging in a trusted way with these organisations to get help for those people who need it in a face-to-face way and for those who need help by telephone and online.

I make that point because face-to-face is needed by a number of people, and I am sure you see them in your constituencies, but the cost, according to the figures that we have done, is about £265 per person. Telephone is around £51 per person; online is £3 a person. We, as a charity, have capacity in that telephone and online space, so what I think the Money Advice Service needs to do is make sure the face-to-face sector is properly funded, and that is essential, but at the same time try to help to move people out of that face-to-face provision where possible into the telephone and online space where organisations like us have capacity. That way you can help more people, help them early, avoid their falling into the trap of, in some cases, ending up with high-cost lenders like payday loans. In the end if they stick with an organisation like us that helps people repay their debt, you may be able to get them into a financial planning situation.

Q18 Mr McFadden: Finally, there are a number of welfare changes happening or under way or about to come in, for example changes in tax credits for part-time workers, changes in housing benefit for people who are deemed to live in accommodation that is bigger than their needs and so on. Do you think there is going to be a greater need for debt advice as these changes come in?

Delroy Corinaldi: I think so. At the height of the credit crunch, 2008-2009, we saw 500,000 people in difficulty. Now it has gone down and we are seeing about 370,000 people, partly because they are paying down their debt but also because the banks are lending less money. We have done some research, and the research points to about 6.2 million people either being in debt or at risk of being in debt, and, with wages not going up and the cost of living rising, clearly that puts more and more people in jeopardy. Just based on hard evidence, the people coming to us are coming to us for major reasons. Unemployment is a factor. The second reason is under-employment is a factor, and you will know under-employment is now about 2 million; two years ago it was about 1.6 million. Then you have other issues like health and divorce that are having an impact. So it is not about banks lending more money and lending in a reckless way. It is because of those other factors that people are falling into difficulty.

Q19 Chair: Have you taken any early steps to have discussions with MAS about the expected upturn in your workload next year? The housing benefit changes come in in April next year, and they sound horrifying from what I am hearing on the ground-the repercussions could be horrifying. There is going to be a stampede of people needing help. Has MAS started a dialogue with you to shape their next year’s business plan to meet this, and did they have discussions about their present business plan with you?

Adam Philips: The answer is no. We had discussions at the end of last year about their business plan, because that is when they prepared the plan. At that stage, it was still not clear whether they would get the debt advice responsibility, so essentially we were focusing on their plan for giving money, guidance and education. We felt at that time that the draft plan we saw was not clear enough, the targets were too ambitious and that the evaluation that they had put in place was, in our view, rather over-simplistic, in that it depended just on people having used the service and being satisfied.

As a result of those discussions, they revised the plan somewhat as it went to the FSA board, and we said that although we remain concerned about the ambitious nature of their targets we had to accept that they believed that they could do it. They were putting in place evaluation, they were committed to an increased involvement in thinking what they could do about financial education, and so we agreed.

Joe Garner: It is a fairly similar story with the Practitioner Panel in terms of mixed degrees of engagement over a period of time. We have had various interventions over the period, and expressed some concerns around clarity of objectives, accountability, measurability. Some of those were addressed. In comparison, by the time it went to the FSA board we were probably a little bit less supportive than the Consumer Panel at that particular point, but we continue to engage with them.

Delroy Corinaldi: I think there is some clarification required over the role of MAS, and we put it in our submission. Is it there to provide services, is it there to be a sort of regulator, or is it there to work in co-ordination with the sectors that exist in this area? It is fair to say at the beginning the level of engagement was not that great, but I think most organisations that we talk to would say there has been a noticeable change over the last month to two months. I think that is part of that-

Q20 Chair: They knew they were coming here, of course.

Delroy Corinaldi: You may argue that, but to be fair to them, certainly in the debt space, it is early days. They only assumed funding for face-to-face advice in April this year, so it is going to take a while for them to deliver on their strategy, but your point is taken on board. It is required that they work effectively with the providers that are out there because otherwise-and I am sure they will not want this to happen-if they are going to look to provide services, then they will need to get funds in order to do that.

David Hawkes: I would certainly echo those points. The Money Advice Service is a new organisation and I guess it is on a learning curve. There has been a lot of talk about constructive engagement with stakeholders. I am not convinced that that has been borne out in practice until, as Delroy says, recently when there seemed to be more signals. We are keen to work much more collaboratively with them because there is a huge amount of existing knowledge, expertise and resource available within my sector-the debt advice sector. We think that in terms of achieving what we want to achieve here we can get much more effective outcomes if we work more closely.

Can I just pick up on a couple of the other issues? In terms of demand, there has been very interesting research commissioned by the Money Advice Trust and Dr John Gathergood at Nottingham University. That has confirmed what Delroy was saying, that there was a drop-off in demand after the peak of the recession, but all the indications are that demand for debt advice is going to increase in the coming years. I have absolutely no doubt whatsoever that welfare reform changes will exacerbate that demand and that is something that certainly needs to be planned for.

Q21 Michael Fallon: Mr Garner, have you seen the Money Advice Service’s business plan?

Joe Garner: I have not looked at it recently. I have discussed it but I have not physically gone through the document.

Q22 Michael Fallon: You have physically gone through it?

Joe Garner: No, I have discussed it with MAS.

Q23 Michael Fallon: But you have seen business plans before in your life as a banker?

Joe Garner: Yes.

Q24 Michael Fallon: Is it not odd that in 24 pages there are only 10 numbers?

Joe Garner: The comment about "clear success criteria, accountability, measurability" is one that we have expressed a number of times to MAS. I think that is an important point.

Q25 Michael Fallon: Are you satisfied this is really a business plan?

Joe Garner: We have expressed some concerns at various stages through the process that it does not cover all the questions that we would have. It is still early days, but we have a number of times requested more clarity on what are the specific objectives, how will we measure progress against those objectives and how the money itself will be spent.

Q26 Michael Fallon: But this is a business plan for this year; it has already started.

Joe Garner: Yes.

Q27 Michael Fallon: Do you share my surprise that, excluding the debt advice stuff, of the mainstream £46 million some £16 million is being spent on staffing and operational issues, over a third of the budget?

Joe Garner: Yes, and the marketing component also has been commented on as looking like quite a large amount on marketing. I think it is fair to say that the questions that have been raised by the Practitioner Panel are not so much around the detail of the expenditure. It is about where is the overall value that we are getting for the expenditure, and it is more the bigger picture that we have focused on than nit-picking on the detail of the business plan-can we understand how MAS’s activity fits in the broader debt advice and advice landscape?-and that is where we have had most of our attention. I agree with you; I think there are some important specifics that we have also raised a number of times through the process.

Q28 Michael Fallon: Why do you call it nit-picking to ask why a third of the organisation’s budget is being spent on itself? Why is that nit-picking?

Joe Garner: Okay, that is probably too extreme a terminology. Where we have tried to focus is looking at the bigger picture of how does MAS fit in the overall landscape.

Q29 Michael Fallon: Mr Philips, have you looked at the business plan?

Adam Philips: Yes, and you are quite right, it is lacking in any history, which would be quite interesting, and it also makes some fairly sweeping generalisations that are not well supported, and there is not sufficient detail in it, I absolutely agree. We did get additional information from them about some of their targeting in order to try to understand more clearly what they are doing.

I think there are two points that are worth making. First, they are very committed to producing an effective web-based service in order to reach a large number of people at a relatively low cost and that does require considerable upfront investment. Our question to them was had they got the balance right between the very ambitious target of reaching 11 million people per year by 2016 and 2017 and getting what they were providing to them in a satisfactory way? In other words, was there too much focus on the web compared with what might be done with telephone and face-to-face?

The third issue, which is not really an issue that so far we have discussed with them, is about how they fit into the landscape of other advice services where we think that they should consult more widely on their business plan in order to make sure that what they are providing is additional rather than competing with existing services.

Q30 Michael Fallon: Yes, I understand that. I want to be clear whether you are satisfied with the level of detail in this business plan?

Adam Philips: No.

Michael Fallon: You are not?

Adam Philips: No.

Q31 Chair: Delroy, do you want to add something?

Delroy Corinaldi: Just one point on that. One thing we thought should happen is it should start from how they are going to measure the fact that they have helped more people. Secondly, they should calculate how they are going to help people early. One of the surveys we have carried out shows that 45% of the people who come to us wait a year until they do and we think they may be looking to provide some analysis about how they are going to help those people quicker. Also, as I said to you earlier on success criteria, how many people are going to pay their loan companies and other similar providers? We have seen an increase from 2% to 13% of people going to payday loan companies in the last two years and whether MAS can have a role in making sure that people are looking after their finances a little better, because people who go to payday loan companies, in our analysis in those figures, are doing it when they already have debt of about £10,500. MAS needs to see whether or not it can be involved in that. I think when it looks at its success criteria it should be able to build the business plan around that. It should then be looking to consult widely on its strategy and on its budget with all stakeholders so that we can get a sense of whether or not it is going in the right direction.

Mr Fallon, on your point about last year’s business plan: I think we would expect that this year’s business plan will be much more thorough because again, certainly in our space, they only got debt advice earlier this year, so I think they should be looking to be more detailed as they move into this year’s business plan and present it to the FSA, so the FSA will have a key role to play.

David Hawkes: A concern that we have in terms of the business plan is just how much money is being spent on branding, on marketing, on communications, including television campaigns, and that is about £20 million. When you compare that with the £30 million being spent on direct frontline face-to-face advice, we are not convinced that that is right at all. We think that there is no need to stimulate further demand. There are already capacity issues, certainly where face-to-face is concerned, within the debt advice sector and we feel that that money would be much better spent on expanding frontline delivery rather than on television campaigns.

Q32 Mark Garnier: My questions are mainly to David Hawkes and Delroy Corinaldi. The MAS has identified its target audience as people with a money advice need where they are facing an expected or unexpected life event or financial decision for which they are not fully prepared. Both of you have talked at reasonable length about the fact that we are spending an awful lot of time on debt advice and trying to help people through catastrophes. Would you not agree that to a certain extent everything has been focused on a problem that is already created and very little has been focused on trying to prevent the problem happening in the first place, and that we should spend more time tackling financial education?

David Hawkes: I would certainly agree that financial education is important, and I completely agree with you in terms of what you are saying about preventing debt problems occurring in the first place. Advice UK have done a lot of work in this area and we have identified that in terms of presenting demand for advice, about 30% to 40% of that demand is what we would call preventable or failure demand. What needs to happen is that you need to analyse what is the demand for debt advice-what are the reasons why these are occurring and what can you do at a systemic level to address those. We have done work in Nottingham, we are doing work at the moment in Portsmouth that is putting these ideas into practice and showing that by designing from the needs of the person, analysing demand and working from that you can prevent problems occurring in the first place, and that has benefits across the board.

Q33 Mark Garnier: Mr Corinaldi, would you agree that possibly one of the solutions is to put financial education on to the curriculum and have it through primary schools and secondary schools?

Delroy Corinaldi: I think one of your guests coming up will be talking about that loud and clear, and we support him in that. Absolutely, I think there is a role for financial education on the preventative side, but I think we have to be a little bit careful in putting all our eggs just in that basket, particularly at this time, and you will have all the analysis in front of you. Up to 2007, the extent of personal loans and credit card debt that was out there for people was significant so the legacy of debt is still pretty high.

The difficulty that we have as a charity in this sector is that we know-and I have pointed to our 6.2 million figure already-there are people out there who are in difficulty who are not acting or getting into a service like our own, and that is a lot to do with the legacy debt and a lot to do with a change in circumstance. So yes, financial education has a key role to play but for us-we are mainly a telephone and online provider of debt advice-we need to have the capacity, which is what we have, because if the Money Advice Service can co-ordinate and work effectively with the sector we would expect to see more people coming in because of their debt advice problems.

Q34 Mark Garnier: You identified a bit earlier that unemployment, under-employment, health and divorce are key reasons for problems, but one you did not identify was the fact that at some point interest rates will start going up from a super low level even to just a low level. With £1.46 trillion worth of household debt in this country, do you not see that as a catastrophe waiting to happen?

Delroy Corinaldi: Yes. There are these uncertainties. What will happen to interest rates? When will they go up? To be fair, for the last two years there have been issues about when will interest rates go up. We have seen some movement now in SDRs, for example, for those people in debt, but let’s not forget housing tenants who are paying housing rent are also finding it very tough at the moment. Private landlords are increasing rents at a level that they are finding difficult to cope with. We should not forget those people. Then there is this other uncertainty, which none of us know the outcome of at the moment, which is what is happening in the eurozone and what the implications of that will be. I think there is a lot of talk about the macro side of things, but there is not much talk at the moment about when it actually impacts on people and what should be done when it impacts on people.

Q35 Mark Garnier: MAS is also targeting approximately 19 million people across the UK. Adam Philips, you may want to come in on this because you have mentioned a couple of times the web-based approach and the online approach. Presumably, there must be huge numbers of people who are being missed out by this approach, who are illiterate, who do not have a computer, who are fearful of computers, or who are uninterested. Let’s face it, an awful lot of people are so uninterested in their finances they do not open their bank statements from one month to the next. Do you think the MAS is replicating an awful lot of what is out there and not tackling an unmet need?

Adam Philips: I think the answer to that is no, in a general sense. There is considerable need for general information such as the information they provide around when you have a child or as you are approaching retirement. Some of the calculators that they have, which we think could be improved but are still really helpful, are very useful for people and I think the health check is beginning to move in a direction that for people who are interested is very helpful. Then we get on to the uninterested-and I think that that is an area where they do have to do more thinking about how they can help people who don’t want to spend a lot of time reading through stuff but nevertheless have a question like, "I have £8,000 in my deposit account, it is not producing any income at the moment, it is what I supplement my basic pension with. What should I do?" At the moment, that is extremely difficult information to get out of the MAS, and that is exactly the sort of thing they should be thinking about how to provide.

Q36 Mark Garnier: Do you not think there is a concern that MAS is to a certain extent going to be duplicating a great deal of what is being done by other organisations? We have another witness coming in later with moneyadvice.com. Would MAS be better employed in acting as a judge of excellence among the other sites and as a signpost as opposed to trying to replicate, or what it appears to be replicating, what is going on for example with your organisations?

Adam Philips: Just talking from my perspective-and Delroy has already mentioned this a couple of times-I do think there is a real opportunity for them to co-ordinate more effectively than they do at the moment. There is a real need in this sector. There is quite a lot of competition between the various providers of money to different target groups. There is a need for a trusted independent resource, which is well-funded and provides good advice and, as I say, provides co-ordination for other actors in the sector. So I think the answer is I would be sorry to see them not providing information that fills a space that no one else is equipped to do.

David Hawkes: We think there are well-established existing providers out there, members of Advice UK, Citizens Advice, CCCS who are out there, so building upon existing service provision, building upon existing brands I think is the key. In terms of your question around the 19 million and are they reaching the people they need to reach, I am not convinced that they are. In a perfect world, yes, 19 million would be great, but in hard times we need to focus on the people who have the most complex problems and who have the highest support needs. One in four of our members-so we are talking about a membership of 800, 400 organisations providing debt advice-target their services. They work with niche client groups, so people for whom English is not the first language, people who are single, young, homeless with drug and alcohol problems, people who are offenders, ex-offenders and so on. We welcome web, online, telephone service, but many of these clients do need face-to-face advice and it is essential that that is not forgotten.

Joe Garner: If you were to take all our total investment in people and money in this area through all the different organisations and a blank sheet of paper, you probably would not design what we have today. What we have today has grown up in good faith but in different areas; and I think the Money Advice Service is one piece of this jigsaw, but who is looking at the picture on the overall box? We have had some clear articulations of what we know about the needs of customers in this area. Is there not a piece of work to be done to map out the total needs of people in this space, map out the total service provision of all these different service providers and then see where the overlap or underlap is? That should shape where we deploy resources, potentially in MAS or others.

Q37 Mark Garnier: That would be the job of MAS, though, or a function of it.

Joe Garner: I think there are a number of organisations that are quite well placed to do that and to provide some oversight so I think it could be done from a number of areas. But I think it would be a worthwhile piece of work to satisfy ourselves not just that there is not duplication around MAS but that we are making the most of the opportunities across all these organisations.

Delroy Corinaldi: I think that is absolutely right. I think genuine partnership is what it is about. MAS is in a good position to have that strategic lead in terms of helping to co-ordinate. In terms of information, yes, MAS can provide information but a lot of the challenge, particularly in our area, is about action, and where we sit is people in crisis and people who need help. In order to get them to plan for the future, you need trusted intermediaries that provide that action. For us to be able to help 400,000 people a year, for 120,000 people, we pay £300 million back to the banks and other creditors. It is the kind of action that helps people know that they can trust organisations to then help them plan for their future. I think that is where MAS needs to look. Not duplicating, not making creditors pay twice, maybe broadening out the creditors that are not currently paying in this sector I think is an important place to be. It has to be built around that genuine partnership, which I think is what Thoresen said when he did his review many years ago.

Q38 Mark Garnier: One very quick last question. Can any of you think of a good reason why you would not put financial education on the school curriculum?

Joe Garner: Far from it. From my HSBC life, I spent five years working with pfeg on what money means, and the value of getting in early in a structured way is just fantastic.

Q39 Mark Garnier: My second final question is would you agree that it is absolutely crucial that in order to avoid in 20, 30, 40 years’ time the same problems we have now that you have to do that in order to avoid those problems in the future?

Adam Philips: Absolutely.

Delroy Corinaldi: I think people forget the other side; if you educate children, they can educate their parents.

Joe Garner: That is exactly what we saw with pfeg when we started with the children and some of them came back with their parents.

Mark Garnier: Nods all round, for the record.

Q40 Teresa Pearce: We are pushed for time so I will try to be quick. One of the things that bothers me is the payment model for them is based on the number of people they see but with no regard to the complexity of those people or their vulnerability. Do you fear that if they are paid just on the number of people they see then the more difficult cases will end up with the organisations like your own that are pushed and pressed for staff and funds at the moment?

David Hawkes: The short answer to that is yes, absolutely, we do have a concern around that. There is a real problem around having, if you like, arbitrary targets, and then the changes that an advice service has to make to deliver those that may mean they are not really delivering the service that people want and responding to those needs.

Q41 Teresa Pearce: Do you see the Money Advice Service as a welcome addition to your industry, for want of another word?

David Hawkes: We definitely welcome the role of the Money Advice Service; there is no question about that.

Q42 Teresa Pearce: What would you want to see it do?

David Hawkes: What we would like to see it do is build upon the existing strengths, identify where there are gaps, fill those gaps but not duplicate any existing provision that is out there. We have a particular interest in what we call a whole-person systems-thinking approach to support a systems-thinking model or approach for the delivery and design of debt advice in the UK.

Q43 Teresa Pearce: Do you agree?

Delroy Corinaldi: Yes, I do agree but I may be repeating myself. MAS and all of the providers have to help more people, you have to help them early, you have to stop them falling into high-cost credit that perhaps is not in their best interests when they have a lot of unsecured debt. MAS also has to help people plan for their future, because saving and investment is going to be key to getting people back on track as well. That is very important. We need to ensure MAS has a role to co-ordinate and to commission, to get some resources in to fund face-to-face advice. Face-to-face advice is essential for people with complex cases. MAS also has a role to make sure that those people who are contributing know that they are not paying twice and that there is some value for money in that. You need to be looking very much at making sure those in face-to-face, if they can go to a telephone and online where there is capacity, actually go there, and that frees up resource for the face-to-face providers to see more people. MAS does have a crucial role to play in that regard but, reiterating what David said, it is not about duplication; it is about genuine partnerships.

Q44 Teresa Pearce: It seems to me that money and finance is complicated, and now it seems even more complicated for people to know where to go to get advice. It is similar to the Work Programme; we have lots and lots of organisations all doing similar things and all overlapping, and it is very confusing to know where responsibility lies. Do you think there needs to be more joined-up thinking, for want of a-

Delroy Corinaldi: This again is where MAS could have a role. If we are saying there are all these providers on the ground doing good work, what MAS should be looking at doing is not only co-ordinating but promoting those organisations so that they are there meeting the needs, they are there reaching out to the hard-to-reach groups, because that is very important.

Q45 Teresa Pearce: More as an umbrella and a signposting organisation?

Delroy Corinaldi: I think so. They have already started doing some good work in signposting because on their web pages, for example, you can get through to us, through to other charities. They just need to look more at, I would say, not being a provider, and they have made public noises on that, that they don’t want to be that, not being a regulator, and they have made public noises that they do not want to be that. Now it is just about finessing what co-ordination means and I think that is where we have to help them to deliver that. Also creditors have to help them to deliver that, because creditors are funding MAS through the creditor levy.

Q46 Chair: That sounds very worrying. If they do not want to be a signpost and then they do not want to be this, that and the other, does anybody at the table know for a certainty what their role is? They have not just arrived. They came from the body that was running under the FSA. I did not hear screams then. This body has been set up with this money and it seems to me, from reading all the papers and all the evidence, they are scrambling around to find a role at a very sensitive time. Does anybody there know what their agreed role is?

Adam Philips: I think you should ask them that question.

Q47 Chair: We will, but it would be helpful if you gave me some advice. If you were happy, I would not have to ask that.

Adam Philips: The role that the Consumer Panel would like them to play is a role-

Q48 Chair: No, I understand you all have-that is the problem. They have business plans and so on, they have got a hell of an amount of money, but all I pick up is fear, from the written evidence I have got, about the damage they might do. They are searching for a role instead of just being a signpost, instead of just doing the consultancy work that you spelled out, Joe, in the first instance, to see where there were gaps or overlaps and get it tidied up and the gaps completed and then give some of the millions that they have either into that service or disappear, or just act as a signpost and keeping their eye on things. I think that is a decent role, but I am not sure they seem to be content at that.

Adam Philips: I think the word "signpost" is perhaps-when we talked about generic guidance or generic advice, we were trying to separate it from information and signposting, because you do need a little bit more than that to help you take action. The issue at the moment is that there is uncertainty. I have read a number of submissions to the Committee by various consumer groups-they were kind enough to send a copy to me-and there is real uncertainty about where they are trying to go. They may have a very clear idea about it but they need to articulate that to other people. That is perhaps where we have said in our submission that in preparing their next business plan we would like them to see what the Ombudsman Service does, which is to go out early and consult other organisations about what they think they should be doing and about the plans that they should have. Perhaps that answers your question.

Q49 Mr Love: George, you have had a theme. I think we have all had a theme today on this relationship. Looking at the definition, the Government asked MAS to undertake a new co-ordinating role. That seems to be the word on everybody’s lips, but we are all interpreting it in different ways. When I look out there at the debt advice sector, first of all, they all work in silos. CCCS, as I understand it, never speaks to Citizens Advice and Advice UK. I have no idea who they speak to, but I suspect probably not much. You have already mentioned that there is a great deal of competition. I would understand co-ordinating in that sense to mean, at least as a minimum, bringing together some of these services and at least helping them understand how they interact with each other.

The question I want to ask advice organisations is do they recognise that this is a complex area-I think the word that was used was "landscape"-that the Money Advice Services is being asked to co-ordinate and do they recognise that it will not be just a case of working in partnership, as has been suggested, but there might be some quite tough decisions if they are to fulfil the remit of co-coordinating debt advice services? Can I ask Mr Hawkes first?

David Hawkes: You certainly can. What I would say is it is a difficult task, I don’t deny that, but I wouldn’t agree with the idea that we work in silos. In terms of my own role, I work with Delroy and his colleagues, I work very closely with Citizens Advice, I work very closely with the Money Advice Trust. We all do at a national level. That sort of working together also happens at a local level as well. We do know each other, we do understand each other and we do work together. So I am not sure that it is such a problem as you present.

I think there is another kind of risk, which is that our members exist because they have responded to local needs from their local communities. They are driven by what their clients and their users want. That creates a complex landscape and I think there is a real tendency to want to tidy that up, but that is the wrong way of looking at it because it is about responsiveness to local need, to local demand. That is why our members are out there. That is the role that they are fulfilling on behalf of their communities. What we should be doing is supporting that and strengthening it by doing a bottom-up approach rather than a top-down one.

Q50 Mr Love: Delroy, as I understand it, you are entirely funded by the financial services sector on the basis that you will do a proper job and in effect save them money at the end of the day. Are you almost quasi-independent on all of this? Is there anything that the Money Advice Service can do to persuade you that you might be able to work more effectively?

Delroy Corinaldi: We have been around for 20 years. We are based up in Leeds in the Merrion Centre, which George Mudie will know very well, and we employ about 900 people who work in the debt advice and debt management world, and we are a national charity. You are right, for a period of time the charities did work in silos, but that is changing. The world out there has changed; the climate has changed; the funding environment has changed.

For example, just to deal with your point about our relationship with Citizens Advice and others, for the last year or so we have had a contractual relationship with Citizens Advice at Myddelton House, its head office, but also with 80 or so of its bureaux, trying to see how face-to-face provision can work seamlessly with telephone and online provision. The key focus of that-and our previous Chairman, Malcolm Hurlston, set this up-was to get people out of what is an expensive space, if they can move from that space into a less expensive space, which is telephone and online, so that you can help more people and help them early. I think more of those partnerships need to happen between ourselves, Advice UK and others to ensure that we are getting more help to people.

Your point around how we are funded through the voluntary contribution that the banks provide at the moment, then we are in a position to share some of that funding. It is crucial, therefore, that-because we are highly efficient, very effective, I would say, and I think the research points to that-we can work with the charitable sector and others to help more people, help them early and the other success criteria I talked about earlier, which is to help deal with some of those people who have massive amounts of unsecured debt, who are falling into the hands of payday lenders and others where perhaps they should not be. That is not to say payday loan companies should not exist. It is just that sometimes their aggressive marketing puts them in a position where they are getting clients who perhaps need to be thinking about dealing with their budgeting circumstance and not taking on more debt.

Q51 Mr Love: If I can put it this way, are we seeing a development that there will be one organisation to provide telephone, another for internet, another for actual face-to-face interviews? Is that the direction we are moving in in terms of provision?

Delroy Corinaldi: You need capacity. If there is one thing the Consumer Credit Counselling Service has at the moment it is capacity and we have it in the telephone and online space. What you need to do is fund face-to-face effectively and make sure those who are providing face-to-face are able to do it in an as effective and efficient way as possible so there is value for money there. Then if we can work together we can all help more people. That is where I think the Money Advice Service can have a role in terms of co-ordination, bringing the sectors together to fill the gaps and make sure we are helping more people and helping them better.

Q52 Mr Love: It is an interesting discussion, but I need to move on to the costs; how the MAS is funded. Is it entirely fair that all of the cost falls on the financial services industry? Mr Garner?

Joe Garner: Is it fair? The industry-

Mr Love: Let me extend that a little bit. In the original proposals from Otto Thoresen it was suggested that the Government would fund part of it. There are those who suggest that since it is benefiting a wider industry group, whose debts are reduced, that they should make a contribution.

Joe Garner: I think the industry has no argument over funding this. My hesitation was that in the discussion earlier it was around the risk of rising interest rates leading to stress for customers. I think the more likely short-term risk is rising fuel and energy and utility prices squeezing affordability. My hesitation was, while I think it is absolutely appropriate for the financial services sector to be funding this, there are other sectors that have responsibilities in this space and maybe they should also be contributing to this area, as both contributors and beneficiaries.

Talking specifically about the industry position, I do not think there is an issue over the price tag. There is a question over value for money for that investment, which comes back to exactly as you summarised it: are we optimising that investment? If it were a business, it would be more closely co-ordinated between the various activities going on.

Q53 Mr Love: I would have to say they have only taken over since July last year, so perhaps it is somewhat premature, but I think there is an expectation that this work will go on. Your members therefore accept the argument that if people are better informed financially that will have a net benefit to your industry?

Joe Garner: Absolutely. On both sides, because one is about avoiding debt and debt problems and the other is more financially literate and capable customers end up as larger consumers of financial products. There is a big savings gap. There is a big pensions gap in this country. Between us we can’t do enough in this area, and the industry absolutely believes it should be contributing at least its fair share.

Q54 Mr Love: Of course the other group that benefits are the individuals themselves. There has been some talk about whether or not there should be some form of fee structure, perhaps on a means-tested basis. Mr Philips, does that have any merit whatsoever?

Adam Philips: I am disinclined to support it. One of the problems we have at the moment is that it is very hard to persuade people even to seek advice. The debate about the RDR was the extent to which people would be willing to pay for advice. If what we are trying to do is raise people’s financial capability, and particularly if we are trying to get them to learn enough about what they should be doing and not to fall into desperate situations, then providing that free looks like a good investment. I would say that the best incentive we can give people to use it is to make it available and to promote it but initially certainly not to charge for it. It may well be that as people see the benefits they may be willing to pay for better and more advice, and that is probably a reasonable way in which many markets operate.

Q55 Mr Love: Let me come back to you, Mr Garner. I was slightly surprised you did not mention the fact that many of your members give their advice free. They do pro bono work, if I can call it that, and many are saying, "Well, we are funding it and we are also providing services free. We won’t do both". Are you noticing any tail-off in their willingness to provide their expertise for a limited time free and do you think that this should be recognised somehow in the system?

Joe Garner: I haven’t picked that up, but I should stress that the Practitioner Panel does not have representation from all the retail banks and is not an industry association as such. I would be very surprised, though. From everything I detect there is a real sense of responsibility around this issue. At the end of the day, any debt that goes bad for a bank also hits the bottom line. There is a very strong alignment of interest in this area, so I have not detected that.

Q56 Mr Love: Let me ask one final question. They allocate the debt advice levy on the basis of 15% of unsecured debt to 85% secured debt. A number of questions have been raised about whether that is an appropriate allocation. I am getting some quizzical looks from you. Is this an issue in any of your discussions?

Adam Philips: It is not an issue that we have discussed.

Mr Love: No, okay.

Chair: Thank you very much. That has been a most thought-provoking evidence session and I am very grateful. Thank you.

We will move on quickly to the next panel. We are going to vote at 4.00pm so if we are still halfway through the evidence, we have enough people to come back and resume with a quorum, if the next panel is happy with that. I don’t want you coming in and having 40 minutes on this very important subject.

Examination of Witnesses

Witnesses: Tracey Bleakley, Chief Executive, Personal Finance Education Group (pfeg), Otto Thoresen, Director General, Association of British Insurers, and Martin Lewis, moneysavingexpert.com, gave evidence.

Q57 Chair: Good afternoon. Martin, if we are not finished taking evidence, are you happy to let us vote and come back?

Martin Lewis: I am, yes.

Chair: Lovely, thank you very much. Depending on how quickly we do it-but I never set a good example myself so I cannot criticise. Andrew, you are first on.

Q58 Mr Love: All of your submissions suggested that you were in support of teaching financial literacy in schools. I think all three of you were in the audience for the last session. The question is should it be a part of the national curriculum in schools? Perhaps, Mr Thoresen, you have a long history here, so you might begin.

Otto Thoresen: I have a long history indeed. I think the simple answer would be yes. The only piece of context I would put that in, though, is that for me, financial capability is about financial capability through life, and at different life stages there are different requirements about how that financial capability needs to be maintained and developed further, but I think the education piece is absolutely critical. We were very close to having it in the curriculum and then just at the last minute it unfortunately fell away. Having seen in schools how enthusiastic and engaging it is for the kids to begin to deal with these matters and knowing how it can also feed through into families and parents and their understanding, I think it is a very obvious and critical thing for us to do.

Martin Lewis: It is an absolute no-brainer and I cannot work out who would disagree with it. Certainly when we have asked our users, 97% of them are in favour and the others had a view that it should be parents. If you look at the general financial and debtor literacy across the nation, we need it to be taught and we need it to be taught to every child. pfeg do a wonderful job but until it becomes a part of the national curriculum-when you talk to head teachers about it, and we all know from the all-party parliamentary group report, which I commend to you and I hope that you have seen it, that head teachers say, "We would like to but it is not on the curriculum. We have to prioritise other things".

That is the blocker, and I think it should be on the basic curriculum not just the national curriculum. It needs to be on the basic, underlying curriculum. When you hear there are mild objections from maths teachers who say, "It isn’t purist", well, we have a big problem in mathematic capability. I have worked with Carol Vorderman on it and we have had large discussions about this from our two angles and we both agree that we want improvements in maths. One of the great ways to get people to understand maths is by using practical problems. The best mathematic practical problems that kids understand are financial ones. I think this is an absolute win.

What I have never understood-and I will throw back to you-is we have all been saying this for so very long; why isn’t it there already? So yes, of course, we need it but, please, somebody needs to do something about it. We have a commitment that it will be on the curriculum review at least.

Q59 Mr Love: I take your point and I have great sympathy for it. Let me ask Ms Bleakley, since you are very directly involved in this. Decisions as to what subjects go in and out of the national curriculum are very much of an educational nature. It is not just about how important a subject is but the balance that you put inside the national curriculum and those that you leave outside. Effectively, these decisions at the end of the day will be taken in the Education Department for educational reasons. What is the role of the Money Advice Service, and indeed other organisations, in promoting the need to have this subject, financial capability, in rather than out?

Tracey Bleakley: I think the Money Advice Service is incredibly important in terms of giving us a national voice and giving us that feed into the Department for Education and informing exactly how that curriculum should work and what the content should be.

One of the things I would like to go back to is equity and trying to make sure that every young person has access to a compelling finance education. One of the things that we have been talking about nationally recently is social inequalities and social mobility. If you don’t teach young people about finance education you are potentially condemning them to generational social inequality because often very poor parents know how to manage money very well, in terms of the context in which they are living, but they don’t know how to make money work for them, and I think it is very important. Certainly when young people are making life decisions for themselves, taking on risk, how they approach that and how they approach decisions like going to university, it is going to be very important for them to be able to make those decisions, and finance education will give them the capability to do that.

Q60 Mr Love: Of course there have been schemes in various schools. Indeed, I had schools in my own constituency who were supported by financial services organisations. However, when the FSA came to evaluate these schemes, they didn’t seem to think that they had added much value in terms of delivering children who were more acquainted with the basics of financial literacy. Why was that and what do we need to do to make sure that next time we get a better result?

Tracey Bleakley: There are a couple of answers to that question. First of all, financial education is fairly new in schools, so a lot of the work that has been done in the past has been about educating teachers and helping teachers to gain the skills and confidence that they need to be able to teach finance education. A lot of the programmes in the past have really helped that behaviour change in schools, so it is more accepted now that teachers believe that they can teach this and in the context of other subjects and, as Martin said, to help contextualise and help with other learning as well as finance education. What MAS can do, and what MAS can take forward now, is to pull together that governance framework.

What we have been talking to them about is if we embed finance education in schools, this should be a finite project because the schools network should be self-sustaining in a few years’ time, if we can get this right-if we can get teacher training, continuous professional development, the resources that we need, the evaluation embedded. The role that MAS can do is to pull all of the different projects together to make sure that they all fit into a coherent strategy, so that we are not picking off some bits and pieces but leaving a whole big area over here that is not addressed.

Q61 Mr Love: Let me stop you there. You hinted at it, but whenever I go into the subject they always tell me there is significant teacher resistance to introducing financial literacy, that teachers who would move seamlessly into that feel that they are ill-prepared. How do we address that? Are there ways in which we can provide courses that will allow teachers to feel more confident in providing this sort of education?

Tracey Bleakley: I think it is shifting, so a lot of the good work that has been done in the past has shifted that perception. Certainly of the teachers we have worked with, 93% of teachers and parents believe that finance education should be taught in schools. I think we have to work with teacher training colleges and we need to have continuous professional development as well. Teachers do not necessarily know how to teach finance education. They are in the same position as parents. It is very different for the young generation coming through. There is increasing complexity in financial products but increasing risk as well, so teachers need to feel confident that they can teach these subjects, that they can have discussions about values and decisions without necessarily giving their own viewpoint or steering pupils down a particular path. It is about being able to teach that decision framework.

We have had very good results in teacher training colleges in our pilots, and we want to take that forward. Because everything is changing, the world is changing and becoming more complex, having that continuous professional development, whether it is online e-training that is easy to access, whether it is a telephone support line that pfeg currently provides, or whether it is networking in peer-to-peer conferences to keep the education ongoing, is important to address that problem.

Q62 Mr Love: That is not the only problem we have to address. Mr Lewis, you touched on it earlier. We have a lamentable record on numeracy and literacy in this country. There are many children in my constituency, to my great embarrassment, who leave school without really being able to count or read and write properly. How do we combine financial education in a way that will help them with their numeracy as well?

Martin Lewis: There are two issues here. There are the 25% who are struggling with the very basics, and there is the 75%. I have heard arguments from people who say we should not introduce financial education until everyone is literate and numerate, but I do not think we should penalise the 75% while we are still trying to struggle with those people who haven’t learnt. I don’t think there is a universal approach here. Those people who are struggling with basic numeracy and literacy, depending on whether that is because of poor educational access or because that is perhaps educational capacity issues of the individual, is something that needs analysing. I do think the basic approach to finances, when I have been in schools and taught it-now admittedly I have the big advantage that I tend to do it with television cameras, which gets them pretty interested.

We talk about the capacity of teachers. It is not right to assume that teachers you think may be able to teach this subject, perhaps because they do economics or mathematics, have an easy read-across. There are many people who work in the City who are great with finance but who are crap with their own personal finances, and the two are not the same subject. When I taught a class for a day, a money makeover class, and there was a television programme where I was challenged to turn them into money saving experts, the person who saved the most money was the teacher who had to sit in there to supervise me, who saved £2,500 after the day’s activities, and she was the business studies teacher.

What we have to understand is this is a new subject. There are certain skills and abilities such as mathematical numeracy and understanding of business remits that are important, but it is something new and challenging. It is not enterprise, and it is not business studies; it is consumer finance. We live in one of the world’s most competitive consumer economies, and what we have at the moment is a real mismatch between the marketing, advertising and sales strength of companies and buyers’ training, which is very poor, and whether that is consumer products or credit products we are very weak at it.

This is something that people are genuinely interested in, thank heavens. It is why I have made a career. If you talk about it with the right language, if you talk about it as an enabling factor to give you more and spend less, to be able to have a better life because you are in control of your finances rather than them controlling you, that is as appealing for an 11-year-old as it is for a 55-year-old. You just have to work out how to target and approach it. We have to get rid of some of the po-facedness. I do think that once we start to teach these practical skills they are not just for the individuals; they are very vocationally advantageous afterwards. If you are an employer, whether you work in retail or finance or any sector, someone who understands money is a good employee. It has a real spread across but it also should draw them into other wider educational needs.

Otto Thoresen: Yes, and I think-

Q63 Mr Love: Let me just ask you, and you can add this to your response. In your original objectives for the service that was going to be set up, can they possibly achieve it without a breakthrough in this area?

Otto Thoresen: I will say what I was going to say and move on to that question.

The financial education piece sometimes suffers a little from a conversation that drifts into, "This is about helping people understand products", and it is not at all. It may lead there eventually, but it starts with the basics of understanding how you live your life and how you are going to make things add up to a positive outcome, if you can, at the end of the month or the end of the week. The review was aiming at the same stuff. It is about the basics of making ends meet. It is about the basics of being in control of your finances, as Martin said.

I do not think you can achieve that across all the life stages or all the age groups that are relevant here without cementing in the financial education piece. Apart from anything else, the connectivity between people emerging from the education system into the workplace, and a pension reform agenda, which is being pushed through strongly from this year onwards, is so obvious that if you don’t have people understanding the tradeoffs they are making and understanding what they might be losing by opting out from the pension reform deliverable, then you run the risk of having a far less positive outcome from that very important change than would otherwise be the case. So I think all the forces are pushing us to the same conclusion.

Q64 Teresa Pearce: I am very interested in what you were just saying about auto-enrolment and how you get people involved, because I am on the Work and Pensions Committee, and it is an absolute barrier. What you are saying is that it is not just about numbers and interest rates, it is about the concept of money. Some of the resistance from some of the teachers I have spoken to is, "Where does it sit in the curriculum? Is it maths? Is it business studies? Is it humanities? Is it citizenship? Where is it?" and it is almost a cross-curricular subject. Tracey, where would you think it would best sit in the curriculum?

Tracey Bleakley: Interestingly, what we have talked about is having financial literacy in maths, so about concepts such as APR and the calculations and that kind of thing, but PSHE being the place where you would have attitudes to finance, plans, goals, needs, aspirations, that kind of thing, so that you can then start making those plans and decisions in PSHE. What we have found at pfeg is that it is not just limited to those two subjects. Teachers have taken finance education and embedded it in maths, geography, history, foreign languages. It has been quite inspirational seeing the children talking about how it has helped them in those subjects, because we have some startling stats. I think something like 90% of 14 to 18-year-olds worry about money every day. So it is on their minds and it is a very practical subject. Talking in geography about why a bank is placed in a certain place, singing songs in music about feelings and worries and issues, it just contextualises lots of other subjects. But to answer the question, the main two subjects is maths for financial literacy and attitudes to planning, budgeting and values around money in PSHE.

Q65 Teresa Pearce: Martin, at what age do you think this should be brought in; at primary, secondary?

Martin Lewis: I think we have a bit of a cabal here as we both work together on the APPG, so I am not going to differ there. Although the one thing I would add is that it is one of the APPG recommendations, which I was very much in favour of, that you have it in maths and you have it in PSHE, but you also have a financial education co-ordinator in the school who is responsible for making sure that the marriage is correct. After you have done APRs in maths, hopefully that week you do the "Good debt, bad debt, should I borrow?" so that the two are linked up.

Personally, I think that I am less worried about primary. In primary, it is about understanding basic concepts of coins and cheques and bank accounts and what they do, and maybe even interest; you know, "If you put your money in the bank, because it can give it to other people it has to pay you for it", and that type of stuff. For me when you really start to get the ferocious interest is 14, 15 onwards, and it should be capitalised on from that point. That is where we are getting to the point where you are four years away from hopefully going to university, which you want to encourage.

With another hat on, I head up the Independent Taskforce on Student Finance Information. We have student loans; we have had them for 20 years, and to have educated a nation into what is called a debt-whether it actually is is another question-and never educated them about debt is a national disgrace. We need that preparation coming up in those years before independence, whether going to university or not. That is when the children at school are really getting interested in it. For me, the power age is 14 onwards, but what you need is when they get there they should have the basic building blocks, they understand core concepts, so you can start to teach them the slightly more complicated stuff.

Tracey Bleakley: Can I just jump in? This is one of the few areas where I might slightly divert from Martin. We are seeing children younger and younger who are exposed to decisions around finance. Stats show that the average age for getting a mobile phone for the first time is eight. For those children buying products online with their parents’ credit card, which is now 20%, the average age where they start doing that is 10. We see advertisers are bombarding children, through television, through internet, through their mobile phones, with advertising about products to buy. We see 98% of children from the age of seven to 11 have their own money, so I believe absolutely finance education should start from four and build all the way through the curriculum, but that key age is getting younger and younger.

Martin Lewis: Don’t get me wrong, I would love that, but if we are going to push a button and we are going to change policy on it, my point is the really important time is 14 onwards, not that we shouldn’t be doing it earlier. I think we are saying the same thing but perhaps in a different way.

Q66 Teresa Pearce: The Money Advice Service, what role do you think they should play in this? Do you see them as an organisation that would provide teacher resources or actually going into schools? What do you see that they can add?

Otto Thoresen: The principle that they should adopt is the partnership principle. The model originally was set up on a partnership basis. It was about providing the glue that held things together, filling the gaps that needed to be filled-a preventative service. I think for me it is very much about operating on that basis and building on the capability that already exists.

Tracey Bleakley: Yes, I would agree. There are a couple of other specifics as well. I would like to see that we are measuring finance education in schools year on-year, because I would like to be held accountable in my organisation that we are helping and that standards are improving in schools. One of the things that we are looking at in partnership is the OECDP as a framework for finance education. It may be that there is something else more specific to UK schools, but I would like to see that put in place.

The other thing that we never talk about really-and when we talk about finance education necessarily it is money-is that all of this needs funding and I am not going to sit here and say that MAS should fund all of this. We have some very keen industry funders, but I think there is a place for funding and certainly to embed this in schools it is going to need to be paid for, so I would like to see MAS take a role in that.

Q67 Mr McFadden: Martin, I would like you to tell us in simple terms the size of the problem, and I suppose I mean this in two dimensions. There will be people in financial crisis who really struggle to make ends meet month to month. That is one part of the problem. Then there will be another broader group who are not necessarily in financial crisis but who are wasting money and with a bit more financial literacy could be saving. You are very well known for telling people how they can save on different parts of their family budgeting. How big is this problem really? You talked about 75/25. Can you tell us a bit more about what you mean by that?

Martin Lewis: The 75/25, and that is sort of out of my range, is how many people are struggling with literacy and numeracy rather than this. It is really interesting because some of the people who are in debt crisis occasionally can be quite financially literate and have an understanding. There is a common misunderstanding that debt is about overspending or mismanaging money. One of the biggest causes of debt is change of circumstance, and we could all struggle if that were to hit us at the wrong time, having made legitimate decisions. I have a debt test I do for 15-year-olds, and the last question is a scenario that you could go for the borrowing and you wouldn’t be wrong to do so or you could not do so and you wouldn’t be wrong to do so, and we can all make mistakes.

Right across society, we struggle from genuine consumer illiteracy, if I can take the broadest term possible, where I would say 60% to 70% of the population simply do not understand many of the products that we have. We know people don’t read small print. I am less worried about that. I sometimes don’t read the small print myself, but they don’t read the terms and conditions. If you actually think about some of the basic day-to-day products-I won’t ask you guys the question, I won’t be that mean-when you have a credit card summary box and it says on there, "Interest-free period 56 days", I think that is a crucial thing people should know but I suspect many people, even in this room-I will not look behind to you lot-would not know that isn’t the same as your introductory interest-free offer. That actually means if you pay the card off in full at the end of the month, you won’t have to pay any interest if you are spending on it.

Those types of complexities and confusions are rife. We talk about auto-enrolment coming. There are many people out there who have companies with contributory pensions who do not realise that they are giving away, effectively, a pay rise by not putting money in. But financial ignorance-people who get 0% deals and then think they do not have to make the minimum repayment each month, people who when they are told the minimum repayment is going lower from the credit company think it is generous rather than the fact it is going to leave them in debt for an extra 10 or 15 years.

I am dealing at the moment with a £9 billion payment protection insurance mis-selling scandal. If you want evidence of the size of this and the sheer tiny amount of money that we are talking about here that would make a big difference in terms of financial education, let us start with that one. An entire nation of millions of people who were conned or mis-sold into getting an insurance product that was often worthless for them and at best was hideously expensive. The few people who got it right either got standalone products or avoided it. The product itself isn’t bad, I should note while we are the record so nobody tells me off afterwards for giving evidence saying so. That is evidential of the trust in our financial institutions, which is unmerited and undeserved, but the lack of personal equipment that we have.

If you ask me what my first lesson to a 10-year-old in finance would be it is that, "A supermarket’s job is to make money from you. That is why they have sweeties by the till so when you go you remind mummy and daddy to buy something more. The person who has the sign saying ‘advisor’ in your bank is actually a salesman, not an advisor. Their job is to try to sell you products, not necessarily to help you". That is where I would start. Sadly, there are many adults out there who do not even have those basic building blocks. In terms of percentages, I can’t help you, I will be absolutely honest, but vastly over 50%.

Q68 Mr McFadden: The Money Advice Service, to go to that, is talking about a target audience of 19 million people, which is roughly a third of the population. It seems to me on one level it is difficult to think of any organisation that can target 19 million people effectively, but you have a very big website. Do you think it is right for them to go to a broad approach like that when you are saying, "Actually, a majority of the population could be doing with some help on this"?

Martin Lewis: If the product wasn’t crap, I would think it might be a good idea, but the product is abominable, and I would be embarrassed to put most of their tools on my website. The financial health check, I am going to read to you. Let me read from Facebook, okay? I deliberately did not ask a leading question. Are you ready? "I am giving evidence on the Government’s Money Advice Service at Parliament today. Ever used it? Try its health check. Does it provide any help? I am not going to cherry-pick. Not cherry-picking. Only for paupers. It’s useless if you’ve already got a bit saved up. Looked at it several times. Not finding it very helpful as it seems very basic. It looks very basic. There’s a fab resource already in existence called moneysavingexpert.com". I liked that one.

Q69 Mr McFadden: Did you write that?

Martin Lewis: No. You can prove this.

Mr McFadden: Just checking.

Martin Lewis: "I’ve just looked and it has no suggestions for where to get a replacement washing machine. No, it states the obvious. I know what I should be doing but, for example, it’s useless telling me I should save for emergencies if I have no cash in the first place. Useless. Looked at it a few times, however the advice seems to be contradictory. For example, saving money for emergencies and paying off debt. Assumes you have spare money. Not relevant. No, just says do all the things I tick ‘no’ to on the financial health check. Would like to echo the above sentiments, it’s useless. Another waste of money and resources." I did also ask on Twitter but they weren’t as nice about it. Can I, on that financial point-

Q70 Mr McFadden: It is a narrow point. Do you think broad is right?

Martin Lewis: I think what the Money Advice Service should be doing with that amount of money is actually looking at-there are some amazing websites and not just mine. This is Money has good stuff, lovemoney has good stuff, and the commercial comparison sites have good stuff as well. What it should be doing is signposting and improving standards in those. I believe we are absolutely ethical, we do it with integrity and we work on a system of telling people what is best for the consumers, but come and test us. Come and give me a stamp that says we do do that, rather than trying to spend £20 million of what is effectively public money on building a brand that is bland, boring, unnecessary and unproductive.

I will just give you an example. I don’t know how many people have used its financial health check since it launched. I think it was something like 80,000. We did something with Trading Standards on the site two weeks ago, a "no cold caller" sign. It was a joint partnership-nice word. When I spoke to the Money Advice Service and they came to me they seemed to be very firmly minded what they wanted to do. They were not that interested in hearing what I thought would be important for them to do, and I have quite a good track record on building money websites. We did a partnership with Trading Standards on day one of our "no cold caller" sign that we got out. We had 150,000 downloads. How much money has been spent for that financial health check? I would have loved to have linked to it but I just did not see any value in it at all so I did not give it-was not consulted on it.

We build tools. I am currently investing a lot of money in building a benefits checker. We already have one that gives you a five-minute benefits check-up. We are now doing one that says, "What would happen if your situation changed?" We are working with Entitled To and the charity Turn2Us. It is expensive, it is difficult and we are taking a long time to get it right. I don’t know why I am building that, which has no commercial revenue, when the Money Advice Service is doing financial health checks that is just a checklist and at the end tells you, "Here’s all the things you answered ‘no’ to. You need to sort them out". The people at the top end seem to be more interested in building a brand.

What the Money Advice Service was originally intended to do was to help the people who are not being helped elsewhere, help the vulnerable and give one-on-one answers, which is what we desperately need for some people. Those people who can use the web can read it for themselves. It is when they have questions that I can’t provide. I have to say, I don’t know where it has gone wrong in the last couple of years, but it is a tragic shame. If you gave me £20 million to spend on improving financial capability, I would not build a website. You say that, I have just given £10 million to charity, and let me tell you I have a fund that is going that way. I would not be spending it on doing what they are doing. This brand-building, narcissistic exercise of trying to compete with things that are already being done very well out there needs to stop. Rant over.

Q71 Mr McFadden: Okay. I did ask. I have only one more. I think I will ask the other two. I want to know your view on the trajectory of demand. We have a lot of welfare changes coming in. We have housing benefit changes, meaning people’s benefits are going to go down because their house is deemed to be too big. We have had tax credit changes for part-time workers, and so on. Do you think more people are going to be getting into financial trouble in the next couple of years as a result of these changes?

Otto Thoresen: I will go back to the core that was in the review, which was about a preventative service, and just a side comment. The debt advice part, of course, was an addition after and it is quite a different kind of service, so I think some of the challenges they have had organisationally relate to that stretch. Going back to the preventative service, the whole point is to get to people at a point where they can take decisions that will avoid their falling into dependency and losing control. The demand for that already is way beyond the resources that are able to serve it. The problem is engagement, of course, and getting people interested. The whole idea was that you used trusted intermediaries, midwives, others, and there were all sorts of models that you can adopt. I agree with you, Martin, it is a bit of a complementary activity to what exists elsewhere.

But to go to the question, of course it is going to grow. You can see the impact of ageing, not just on the pensions need but on social care and related services. You can see the impact of higher interest rates, which was mentioned in the earlier session: energy costs; the unemployment rate is probably going up; the difficulty of people having the income they need to cover their existing position. One way of trying to mitigate the damage that can be created there is to get people to try to stay ahead of crisis, and this service is a potential way of trying to create an environment where more of that happens. However, the demand will go up and the need will go up.

Tracey Bleakley: One of the things that I thought was interesting about MAS’s remit, and it was alluded to by the gentleman from Advice UK, is that debt advice services are seeing on the ground what is happening and the changes that are happening, which you alluded to in your question. It would be interesting to see how that could be fed back into finance education, because we don’t have that feedback loop at the moment. MAS would be in a unique position to be able to effect that.

Q72 Chair: Before Mark comes in, I thought, Otto, that you were very cautious and generous in your written evidence to MAS. But Martin said what I hoped you would say, because he said you had done a great report and in the early stages of implementation it was going in the right direction. What we hear this afternoon, what I get from all the evidence, is nobody knows what direction it is going in. So you are being generous, aren’t you, in terms? That sort of generosity is nice, but it is not helping the people that you wanted to help in your original report.

Otto Thoresen: No. The reason I was temperate in my comments is partly it is four years later. We published in 2008 and the world of 2012 is a different world. That is the first overview. I have not had much engagement directly with them during that period, partly because I felt the right thing to do was to let them get on with it. They are the management who are trying to make it happen. They have gone through organisational change. The resources were taken from the FSA-

Q73 Chair: Were those changes necessary? It is a different world, but it is not too far away.

Otto Thoresen: No.

Chair: You did a report. It was set up. The FSA assessment of it was very, very good. At one stage it was called world leading, and suddenly it is handed over to new hands with a pot of money and nobody knows what the hell is going on.

Otto Thoresen: I think even I was clear that I was very disappointed in the level of engagement and the openness and the transparency around what was going on, but I do detect-and I heard in the earlier session-a change in the last couple of months. There is a change. There is more openness now; informal discussions around the fact that we should be consulting ahead of the business plan being created, not after; far more visibility around the trusted intermediaries’ work, which I had begun to think wasn’t getting done at all but it actually is getting done. Some of the workplace stuff is still being done. It just doesn’t get the profile that the brand building does, that the web does. The other piece was the health check. Of course, the health check was new too. It has been something that has drawn resources away from some of the other things that needed to be done.

Q74 Chair: It needs a health check itself.

Martin Lewis: Two days’ work, that, for my team.

Otto Thoresen: I continue to have a passion that this preventative service is vital and can make a huge difference to outcomes for citizens in this country. I believe that many of the components are still there, but I do think that the way we work and the way it works with us needs to change, and I think I was pretty clear about that in my evidence.

Q75 Mark Garnier: Martin Lewis, you have been pretty clear about what you think about MAS.

Martin Lewis: I haven’t actually. What I need to state is I genuinely support the concept of MAS. It is the way it is delivering it that I don’t.

Q76 Mark Garnier: What I want you to expand on is it seems at the moment to be an organisation that has lost direction. It seems to be pretty clear around the table that nobody quite knows that the point of it is. What should the point of it be? What space will it fit into where it will provide value for the consumer?

Martin Lewis: First, on the back of what Otto said, one of the reasons things are getting better is because you are doing this, so well done. They knew this was coming and they knew people like me were going to come and give them a kicking, so they have tried to improve things. This is a good thing in itself and it should be applauded that someone is finally taking a look at this organisation.

As for what they should be doing, I think, first of all, this target of reaching 19 million people is just wrong. What we want to do is reach the people who are not being reached. When it comes to the web we reach a lot of people, as do many other websites. If you think that building a website is going to attract people that the other websites don’t already reach you are bonkers and it is a silly plan. What people come to me and ask me when they see me in the street or on Twitter and Facebook is, "Who do I ask? I don’t understand. Who do I ask?" My problem is I can send them to my website; "I have read it and I don’t understand it, and I’ve read elsewhere and I don’t understand it. I just want to ask someone". Where I would start on this is, "I just want to ask someone". That was the initial provisions of the MAS, setting up generic advice.

I am not the greatest fan of generic advice because it is too generic. People want answers, not issues, but it is better than nothing; just having somebody to talk to. We look at payment protection insurance. It is a really good example of looking at a mix of capability levels. We have many people who do it through my site and through Which? and we have a partnership on that at the moment. There are many who pay 30% to go to claims handlers. They may not understand how much they are paying, but a lot of those do it because they don’t understand how much they are paying. That is a problem. Some do it because they want to talk to somebody about it. What I think the MAS is in a unique position to do is to provide face-to-face or on-the-phone real people you can talk to whom nobody else is ever going to be able to resource. I taught for years. I have been-

Q77 Mark Garnier: How would they capture those people? If you are a person who is not on the internet, chances are you are illiterate, you are very poor and you have a problem. How would you be connected to the MAS?

Martin Lewis: First of all, I would have television adverts that talked about the phone service, not about the website, and start that saying, "There is somebody you can talk to" rather than, "There is somebody you can go online to". Also, exactly as you said, maternity nurses, social workers, mental health caseworkers, all of those people need to know and understand what the service does. One of the great chicken and egg situations is when I talk to them and ask, "Why don’t you recommend MAS?" they give a similar answer to the one I gave you earlier, "Because it doesn’t seem to be that good". Unfortunately, I think the website is leading to the deterioration of the brand reputation of what was a relatively good phone service. I have met some of the people, and the phone workers, many people in MAS who genuinely are passionate, care and give good answers, but I think some of it is drawn away from that.

It is never going to be easy to reach those people but Citizens Advice, Christians Against Poverty, Consumer Credit Counselling Service, National Debtline, do reach people who are in debt crisis. The problem we have is that we have nobody to ask when you are borrowing in the first place as a preventative measure to stop you getting into debt crisis. That is what I always thought MAS was there to do for those people who are not on the internet, and it has not done that. So what we need is a preventative service. I have always thought that is what MAS is there for. Yes, it can co-ordinate the debt advice-that is great, and definitely helping with financial education, as part of prevention. Giving people the ability to ask questions will take years to build, but you may find it has more support from people like me if it were doing a decent job and providing those provisions, rather than trying to replicate things that already exist.

Q78 Mark Garnier: Who regulates your website?

Martin Lewis: Apart from very basic FSA regulation for insurance, about 14 million people a month.

Q79 Mark Garnier: Good answer. Do you think there is a role for the MAS to give a flag of excellence to certain websites where they are doing an outstandingly good job and supplement that signposting function to one of giving credit to a good site worth going to?

Martin Lewis: Very much. I think the FSA and other organisations are there to regulate, and I don’t think the MAS should be regulating. But I believe, and I may be wrong, that we have some great information and tools that are substantially good, as do other websites, including the newspaper money sites who do a very good job as well. What I would not say is that MAS should come and give my website a stamp of approval because I don’t think there is a universality there. I think it should create-I have never liked Kitemarks, but let us call it that for ease of phraseology at the moment-a Kitemark system that says, "If you’re looking for information about benefits moneysavingexpert is great. If you’re looking for information about credit cards This is Money is great, or maybe both are great for those things", and to try to drive standards up.

MAS says the reason it is building a website is because there needs to be an independent trusted source. Well, I believe we are exactly that, but I am happy to prove it, and I am happy to prove it to MAS if it would come and talk to me and give us some guidelines that we could follow so it could say we are an independent trusted source rather than duplicating our work. We are already used by 14 million people. If it has any questions about what we do, why not have a system that gives us some standards we have to meet so that we know those 14 million people are getting decent information? Of course, let me say on the record I think they are but I am happy to prove it, as I am sure are the editors of the other major websites and the price comparison services, who at the moment have bottom-up regulation from the FSA. We all talk about the fact that we want them to be balanced and work forwards. Why not have something that we can aim at and achieve and then MAS can signpost it?

We already have this in energy comparison services. It used to be Energywatch; it is now the Consumer Focus confidence code, and what it says is these comparison services all work in a certain way that means they are not biased against companies that don’t pay them. They don’t change the order and various other factors. It seems to me that if what we want is decent web information it is already being given out there. Let’s make sure that those standards are right, right across the board, people know who to trust and who not to trust, and then spend that £20 million rather than competing with the hundreds of millions in the brand-building television adverts from the big comparison sites, which MAS does not have the money to do, on decent financial education, on a telephone call centre that people can call, on face-to-face advice and giving talks around the vulnerable groups so that we go and reach people in housing associations and on council estates that are not being touched at the moment, where the money would do real good. I don’t believe a lot of that money is doing real good at the moment, apart from a relatively narcissistic brand building exercise.

Q80 Mark Garnier: A final question to each of you in turn. How effective has the MAS consultation been with various organisations and how effective has it been with each of your organisations? Tracey, do you want to start?

Tracey Bleakley: I am very pleased with the recent consultation with pfeg. I feel like we are working towards a national cohesive strategy, so it has been working very well with us recently.

Q81 Mark Garnier: So you are happy? Otto?

Otto Thoresen: It was non-existent for a long time.

Q82 Mark Garnier: But they are engaging now?

Otto Thoresen: But they are engaging now.

Q83 Mark Garnier: Is that as a result of the fact that we are giving them a bit of a kicking?

Otto Thoresen: I am sure that was part of it, yes.

Mark Garnier: Fantastic. Martin?

Martin Lewis: I met them in the very early days. I was talked to rather than listened to about what was going on, and pretty much the warnings I have just given you I warned against at the time and they were not listened to. Apart from people who work in the organisation contacting me to leak information to say how unhappy they were with the direction and "Please can you do something about it", I have had no talk at the top end. Basically even when I was running the Independent Taskforce on Student Finance Information, when we asked for details of all the different groups and their reaches and things, because they were so worried about me-apparently I am a bit of a demon figure there and I have maybe just proved them right but it was circular-they were scared about giving us information about how much web traffic they had in case I used it in a negative way for the taskforce. Freedom of information requests to see how effectively this money is being spent would be great. So not at all, non-existent apart from in the early days and then they basically ignored everything I said, and I have not spoken to them since.

Q84 John Thurso: Martin, can I come to you first? You have answered most of what I wanted to ask you in your wide-ranging answers earlier on. Thank you very much indeed. You talked about the incredibly lopsided nature of the massive scale of advertising on one side for the producers and the miniscule help for the consumers on the other. This is a question I put to the last panel, which is to what extent should the consumer expect a range of simple products that simply do what it says on the tin before you get into the more complicated stuff? Are there not products that need to be produced where if it says it does something, it does it, and that is that?

Martin Lewis: I think things should do what they say they do. I would probably disagree with Otto on this one, to be absolutely honest. As someone who studies these products, and we study in great detail how they work, the simple ones are rarely the best ones. The ones that are best for most people are the-if you want a savings account right now, anyone who gets a standard rate savings account is a fool. The best savings accounts right now are the ones that give introductory bonuses for a year. What you have to do is diarise in a year to ditch and switch. If you try doing a simple system you are not getting the best deal. So I am very torn with your question. I would like simplicity but it does not exist and it does not work for you. We are always going to have an unequal system whereby those who have financial knowledge and information can do relatively well and those who do not can do relatively poorly.

The one big advantage over the last 10 years since I started is the internet has made a change in that balance. There are far more information haves than there used to be. It is still nowhere near big enough, it is still less than 50%, but there are people who now realise that on every transaction you do, if you think about it, do your research, you can improve what you are getting.

Every time I have seen simple products, even the early cap-marked ISAs when that first came out, unfortunately what happens is the companies who sell them know that they will sell because they have the simplicity standard and therefore they give very poor rates. I don’t ever remember saying one of these products is any good because the rates are so poor because they sell on the back of simplicity. So I think there would be a real problem in that.

Q85 John Thurso: If you look at car insurance, for example, what we know is the law says you have to have third party, fire and theft and you know that that will be delivered, you will meet the legal standards. So there is a basic product that you can buy without talking to anybody for advice. You can be advised as to which ones offer the best deal, but you will know you get what it says on the tin, whereas if you look at PPI, it never did what it said on the tin, ever, and never had a hope of doing it. That is the point I am driving at.

Martin Lewis: I would certainly agree that for a product to call itself a name it should define what it does. We have this with critical illness where we all know that companies have sold them on the back of it will cover you if you get cancer. Well, it will not; it will cover you if you get certain cancers that are on a pre-marked list. I think it would be very interesting to have a definition of what a product is rather than any other standard, "You can’t call yourself PPI unless you do the following minimum". So I would agree with you there.

On car insurance, the problem with car insurance is for many people if you do a quote, comprehensive can be cheaper than third-party because the actuarial risk charts mean if you are opting for comprehensive you are a lower risk than third-party. So we always tell people, "Check third party and comprehensive if you want the cheapest because it won’t necessarily be the logical one". That lack of logic, whether it is train fares or car insurance, is one of the things we need to give people a degree of attractive scepticism in when they are choosing anything, that you have to do your research.

Otto Thoresen: It is a wonderful thing, experience. I did expect my experience this afternoon to be exactly how it has been, Martin, and I have really enjoyed listening to your answers.

Q86 John Thurso: My question was to ask all of you very quickly, MAS is a fairly young organisation, how has it performed? I think you have already answered that so let me ask you this, because I think there was a genuine desire to see it perform. What three things would each of you want it to do to get on track to deliver what you would like it to do deliver? Perhaps start with you and just go quickly along.

Tracey Bleakley: I would like to see a national strategy for finance education, so pulling together everybody in the area to this cohesive strategy so we can get it embedded in the school system once and for all. I would like to see year-on-year testing in schools so that we can prove that we are getting better and better at it and long term evaluations so we can prove it is worthwhile. I think that MAS has a part to play in helping to fund that.

Otto Thoresen: I think some of it is about going back to basics, to be honest. I think the refocusing on the preventative piece, I think the refocusing on the partnership piece and working with partners, and I think a strong emphasis on engagement with others who have already acted around the boundaries here and make that real, because it has not felt real and as a result there is waste. I think the final one, if I am allowed a fourth-I know it is a cheek-somebody said earlier it was £40 million of public money. In fact it is £40 million of financial services organisations’ money. There was an attitude in the earlier years that it was theirs by right and it was just a question of how they were going to spend it. I think that has to flip over. Somebody said if this was a business it would be run a different way and I think there is an attitudinal change that says, "If you are spending £1, why are you spending it, and what alternatives are there to that?"

Martin Lewis: I would ask that it focuses on most need, not most numbers. I would also go with a national strategy for financial education in schools, which I think is absolutely crucial. Finally, it needs to focus on person-to-person not mass mainstream and it needs to be giving one-on-one help, whether that be by phone, whether that be person-to-person, whether that be on the internet. In that version would be a great website. People need, when they are vulnerable especially, someone to ask and to give them confidence, even if it is just to say, "Am I allowed to reclaim PPI because they did this?" "Yes, that sounds pretty good, you’ve probably got a decent chance there." It is interesting, £40 million you say; the claims handling industry looks set to make about £1 billion out of PPI. Let’s just put it in context. That is what we are asking for, that money goes into one-on-one help so vulnerable individuals have someone they trust and they can ask rather than read and have to do it themselves when they lack the confidence to then act. A lot of people have financial phobia and I think MAS is a brilliant opportunity for helping those people rather than trying to compete with newspapers and websites.

Q87 Chair: Just on the question of the three things in terms of email and the call centre, I am hard pressed to see how they can, even with that budget, have face-to-face. Citizens Advice Bureau has 400 outlets, I think it could be 500 but it is in that region. If you thought this national service of MAS was going to give face-to-face, what about Leeds, what about Wolverhampton? How do they do that? They have to work with partners and they should confine themselves to some sort of point of contact that allows them to send them to the most appropriate organisation.

Otto Thoresen: I think Martin’s point on this is a very strong point. I think it is understood by MAS, because it is a very powerful medium for the types of people we are talking about.

Martin Lewis: If you look at Christians against Poverty, which teaches church groups to help other people out of debt, or you look at CCCS, which has its own courses-I have a charity, the MSE charity, we try to give financial and consumer education grants to people to go and do courses. MAS could have a qualification that it helps volunteers who then work out of CABs, if it did partnership, get that qualification and give preventative information as opposed to debt-based information.

Chair: You envisaged that. You had people going into prisons and into firms who were trained to train other people, so it was a beginning. It just needs back to the basics, really.

Thank you all very much. It is a major miracle that we have finished before the vote, and you will be grateful you do not have sit around for us to come back from voting. Thank you very much.

Prepared 22nd June 2012