HM Treasury and the Department for Work & Pensions will commit to work together on the running of the single financial guidance body which will replace the Money Advice Service later this year.
Writing to the Treasury select committee, John Glen, economic secretary to HM Treasury, defended the government's plans to place responsibility for the body in the hands of the DWP.
It comes after the chairman of the committee, Nicky Morgan, said she was not convinced it was the right department to look after the new guidance body.
Mr Glen said: "The government decided that DWP was best placed to be the lead department for the single financial guidance body.
"DWP has dedicated resources, including an in-house sponsorship team with experience in managing a portfolio of similar arm's length bodies and a project management team that has been running the project to set up the single financial guidance body.
"The details of the relationship between the single financial guidance body and DWP will be set out in a published framework document and the details of the respective role of DWP and Treasury ministers will be set out in a memorandum of understanding between departments.
"A joint programme of work is underway with the Treasury and DWP developing plans for transition from the existing organisations to the new body.
"The memorandum of understanding will be developed as part of this programme and published when the new body is established."
The plans for a single financial guidance body were announced by George Osborne, the previous chancellor of the Exchequer, in 2015 to create a more "joined-up approach".
It will bring together the functions of the Money Advice Service, The Pensions Advisory Service and Pension Wise into a single body.
The bill creating the body has not yet finished its progress through Parliament and Mr Glen said the body itself would not come into existence until autumn at the earliest.
The new body is set to be created after the Money Advice Service came under fire from MPs in the past for spending too much money on marketing and duplicating others' services.
An independent review in 2015 stated Mas needed to "reboot its business model" as part of wide-ranging changes.
Statistics published by the Financial Conduct Authority in June 2017 revealed the shockingly low take-up of government guidance services.
In the regulator's 48-page Financial Advice Market Review Baseline report, the FCA stated of those aged over 55 plus and planning to retire in the next two years, less than half (44 per cent) had used at least one form of guidance or information.
However the FCA revealed only 10 per cent had used The Pension Advisory Service (TPAS) and only 7 per cent used Pension Wise.
damian.fantato@ft.com
