An independent review of the Money Advice Service (MAS) will recommend it cuts more than half its staff and reduce its budget by as much as 38%, according to a report.
The Treasury-commissioned review by former National Association of Pension Funds chief Christine Farnish suggests cutting the MAS's full-time staff from 130 to around 50 and its £81.1m budget to between £50m and £65m, according to a draft copy seen by The Telegraph.
While the Furnish review points out the service has "an important job", it suggests many of the financial services it offers are covered adequately by other organisations and websites.
The report suggests it should be the MAS division that provides information on mortgages, savings and other matters - rather than the proposition that deals with debts - that should bear the brunt of the cuts, the Telegraph reports.
"There is a high degree of duplication between the MAS and other websites which offer content on financial issues," the report says according to the paper.
"We question whether a body like MAS ... should even seek to compete with the wide range of other bodies which already have trusted brands and extensive consumer reach. It still has an important job to do but change is needed."
In May, the Treasury announced there would be an independent review into MAS following concerns - and in some instances scathing criticism - of its role, reach and effectiveness. In December 2013, the chairman of the Treasury Committee George Mudie said: "The Money Advice Service is not currently fit for purpose."
However, a National Audit Office report published about the same time took a more lenient view, saying the MAS was "moving in the right direction" and was already providing valuable debt advice.
The Farnish review has been tasked with assessing the need for consumer education and advice on financial matters, particularly in the wake of the Budget pension freedoms, and examine whether MAS is capable of serving that need.
MAS chief executive Caroline Rookes has staunchly defended the organisation.
It was due to report back by the end of the year.
Lloyds Banking Group recently announced it would cut standalone protection sales and only advise customers on protection needs as part of a mortgage sale. Scottish Widows had previously offered direct protection sales as part of Lloyds. The bank confirmed that any standalone queries on protection would be directed to the MAS.
Speaking to COVER magazine, Johnny Timpson, financial protection specialist and planning manager at Scottish Widows, said: "At a time when the need for family financial resilience and protection is increasing and access to advice for many is reducing due to costs, any loss of financial protection need educational, information, signposting, resource, support and communication reach from MAS is a concern.
"As one who monitors the activity of both health and debt charities, whilst they do a great job, they face significant call on their resource and I'm not sure that they can fill this gap without support - It does put even greater need for the industry to get behind and support the "Seven Families" initiative."
