The Money Advice Service – the official organisation created to offer consumers free advice on their finances – is to be replaced by a new "slimmed down" body under plans set out in the 2016 Budget.

A consultation document published alongside the Budget reveals plans to "restructure the delivery of public financial guidance" with a new pensions guidance body.

It will merge the functions of The Pensions Advisory Service and Pension Wise, as well as some of the pensions guidance provided by the Money Advice Service (MAS).

The MAS will be superseded by "a new slimmed down money guidance body charged with equipping consumers to make more effective financial decisions". Its priorities will be identifying gaps in the financial guidance market, commissioning targeted debt advice and money guidance, and providing funding to third parties to help deliver these services.

Caroline Rookes, chief executive of the MAS, says: "We will work with the Government to fully consider the implications of this announcement. In the meantime we will continue to fulfil our statutory role to help people make the most of their money."

A consultation about the new bodies will close on 8 June 2016, with the response due to be published in autumn 2016. The earliest the new bodies will be up and running is April 2018.

What is the Money Advice Service?

The MAS was founded in 2010 as an independent body to help improve money management across the UK.

Under the Financial Services Act (2010), the service is responsible for promoting the benefits of financial planning and providing unbiased, free financial information and advice to members of the public. From 2012, the service also took on responsibility for funding and improving the quality of debt advice.

Since it was set up it's faced widespread criticism – a National Audit Office report in 2013 found it had "not yet shown that it had achieved value for money", and founder Martin Lewis gave evidence to MPs criticising its service.

But it had taken steps to try to turn things around. In March 2015, an independent review of the service set out improvement plans and Martin was among those to join a 'challenger panel' last year to try to help.

Budget 2016: Money Advice Service to be replaced
Budget 2016: Money Advice Service to be replaced

'It should have been given 18 months'

Martin says: "I've been no fan of the Money Advice Service over the years. Indeed when I gave evidence to the Treasury Select Committee in 2012, I said I thought it wasn't just crap, it was abominable, and I would have been embarrassed to have its 'Money Health Check' tool on

"Yet since then we have had the Farnish report and I sat on a challenger panel trying to turn the ship around. Finally, the MAS was starting to point in the right direction. Instead of spending what is effectively public money duplicating services that already exist, it was starting to look at gap provision and financial inclusion for the people who aren't reached by websites and financial advisors, and going for the vulnerable communities. That combined with financial education is what the core of the MAS should have been about in future.

"So while I would have certainly welcomed its closure three years ago, now I think perhaps it should have been given 18 months to see if, now pointed in the right direction, it could have moved forward and started to do some good.

"However, none of that gets over the fact that over the last five years since it was founded, certainly £50 million has been wasted on a brand-building and rent-seeking exercise which could have done so much good elsewhere."