30 Mar 2016

Employers in line to fill void left by scrapped Money Advice Service

One of the casualties from the 16 March Budget is the Money Advice Service (MAS), which has provided financial and debt advice to consumers since 2010. MAS is to be abolished and replaced by a smaller body. MAS was of particular use to low-income earners who could not afford to pay for independent financial advice.

The announcement comes after findings from the Financial Advice Market Review (FAMR) report, also released in the same week as the Budget, which says that those who need financial advice the most are struggling to access it due somewhat to prohibitive costs. It called on the Financial Conduct Authority (FCA) to help employers offer financial support to their employees.

The review recommended that: “The workplace presents an opportunity to help more people access financial guidance and increase take-up of financial advice. FAMR’s recommendations therefore seek... to improve incentives to employers to support their employees’ financial health where appropriate.”

Victoria Raffe, former FCA executive committee member and now member of the advisory board of financial employee benefit firm SalaryFinance, says that employers are well placed to fill the void left by abolition of MAS. "It needs to be much easier for people to get help on their finances, and their place of work is an obvious option. It’s also in the interests of employers to do so, given the clear link between an employee's financial health and their performance at work” she added.

While it is clear employers can play a valuable role in helping their staff and many are interested in doing so, the FAMR report showed that companies are confused about what support they were allowed to give. “The FCA must make it clearer what support employers can provide their staff to help them better manage their finances" said Raffe. “As part of this, it's absolutely critical that lower paid employees get easy access to solutions that help them pay off high cost credit, the cause of significant financial distress."

Thanks to London’s growing FinTech (financial technology) scene, employers already have solutions available to them and have the ability to make a hugely positive difference to the financial wellbeing of their staff. By leveraging their scale and infrastructure, often at little or no extra cost to them, employees can be provided access to valuable financial benefits.

This article was written by Asesh Sarkar, chief Executive at SalaryFinance.