The Money Advice Service (Mas) will be scrapped in favour of a new delivery model merging the functions of The Pensions Advisory Service and Pension Wise.
Chancellor George Osborne has decided to replace Mas with a much smaller body to focus on providing “frontline” services to those in financial difficulty.
HM Treasury released a follow-up to its October consultation on how publicly funded pensions guidance, debt advice and money guidance could best be restructured.
The new consultation into the proposed delivery model is seeking industry views by 8 June.
A slimmed down money guidance body will be charged with equipping consumers to make more effective financial decisions.
The report also confirmed the new bodies will be funded by levies on the financial services and pensions sectors.
The government will publish a final response in autumn 2016.
Mas, an industry-paid for body designed to give guidance to consumers on their finances, was set up in 2010 and was funded by a statutory levy on the financial services industry
In 2013 a hard-hitting report said it was “not fit for purpose” after awarding “excessive pay” to its senior staff.
Mas spent more than £100m on developing and promoting its website and former chief executive Tom Hobman was paid £350,000 a year, before he resigned in 2012.
Steven Cameron, pensions director at Aegon said: “The Financial Advice Market Review is encouraging the private sector to fill the advice gap with new guidance models, and from a pensions perspective, there’s arguably a more natural connection between pension firms, advisers and their customers, than there is to separate public bodies.”
Chris Budd, managing director of Ovation Finance in Bristol said: “I understand that the annual cost of the three Govt agencies to deliver ‘advice’ and guidance was £128m. If this amount had been given to the industry they would have reached 5m people a year and all but got rid of the advice gap in two years. This could be achieved by the government working with the financial services sector, not against us.”