The public could be left millions of pounds a year poorer if the Consumer Focus watchdog is scrapped, it is feared.

The body, which has tough powers to protect consumer rights, is one of 192 quangos set to be culled or disbanded under plans set out today by the Government (see the Financial Fight Back guide).

Consumer Focus, created two years ago, is to be abolished and at least part of its work transferred to Citizens Advice under proposals to be finalised early next year.

If the Government plans go through, as part of its massive austerity programme, Consumer Focus will be scrapped in early 2012.

The body points out that it makes the public a huge profit. It costs £13.9 million a year to run but only £5.2 million of that comes from the taxpayer, and the remainder from the energy and postal industries.

It estimates, in its two years, it has helped return £500 million for consumers, at a £250 million a year average.

Among its recent high profile successes have been the return of £70 million to those who were Npower gas customers 2007 and speedier cash Isa transfers, following a super complaint, that will save the public £15 million a year (see the Cheap Gas & Electricity and Full Cash Isa guides).

Big wins

Consumer Focus chief executive Mike O'Connor says: "Consumer Focus has achieved big wins for consumers in just two years. We've delivered our biggest results in the last few months but the biggest challenges for consumers are ahead, with major reforms to the energy, post and financial services markets.

"What matters now is that the transfer happens in a way that works in consumers' interests. The expertise and knowledge that has enabled us to fight for consumers must not be lost.

"Changes must not be at the expense of the public's rights and needs - which organisations like Consumer Focus were created to protect."

Martin Lewis, creator, says: "This is a bonkers move. To remove an organisation that over the last year has found its feet and has made consumers over £80 million in the last couple of months alone, leaves us without any state-funded body focused on fighting for consumers.

"I'm a big fan of Citizens Advice, but it's a charity that focuses on individual advice, not attacking the minutiae of public policy.

"While it will take on some of Consumer Focus's functions, this comes at a time when its budget is being slashed, and it needs to pump its resources into continuing to give brilliant advice.

"Of course, there are independent bodies such as Which? and that fight for consumers too, but sometimes a private sector solution is not appropriate – and often it's difficult to get the various organisations to work together.

"The focus and power Consumer Focus had to ask questions of big business and big government were integral to supporting consumers and will be a big loss.

"Instead of a national body to delve into complex policy, we're left with a raft of questions such as who'll accredit energy comparison sites. No one knows.

"Most business failures and personal bankruptcy doesn't happen during recession. There's a time lag of up to two years after – we're entering that period now.

"We should be adding to resources to protect consumers, not removing them. This will leave a raft of sectors where regulation is lax but there's no big organisation with the power to step in. Terrible!"

Further reading/Key links

Get your money back: Financial Fight Back
Reclaim mis-sold debt insurance: PPI Reclaiming
Other issue-specific reclaim guides: Bank Charges, Credit Card Charges, Direct Debits, Setting Off, Mortgage Arrears, Endowment Mis-selling