The service is “not currently fit for purpose”, MPs concluded.

The independent review should be concluded before next summer and will seek to determine whether the MAS should continue to exist as a statutory body and, if so, how it can overcome the “serious problems” found by the Treasury sub-committee in its report, out today.

Labour MP George Mudie, who lead the sub-committee, said MPs had come close to asking for the service to be scrapped, and had only been held back by the Treasury’s previously announced review into it.

Mudie said: “The MAS is not currently fit for purpose. It is far from clear that it has adopted the right strategy or even that it is performing the correct role.

“In finalising this report, the committee considered carefully whether to recommend that the MAS be scrapped completely. Given that the Treasury had already announced its intention to conduct a review of the MAS, we were persuaded to grant a stay of execution.

“People up and down the country, particularly at this time, need access to high quality money and debt advice. If this is to continue to be facilitated by a public body, a radical overhaul is needed.”

Mudie added that he expected MAS’s management to respond to the reports findings and outline how it intended to rectify the problems highlighted.

The sub-committee’s report found that the MAS’s strategy to rebrand was “misguided” and the large amounts of money spent on marketing were mis-spent.

In June, the committee criticsed MAS chief executive Caroline Rookes during a grilling in front of MPs after it found that the service was still overspending on marketing and did not spend enough on service delivery.

It also found that the MAS was duplicating services that were “already being provided in the private and charitable sectors” caused by its “initial failure effectively to consult and build relationships with existing organisations in the sector”.

It had concerns about the quality of the service MAS was providing and suggested it should have re-focused resources on debt advice, responding to “changes in demand” sparked by the difficult economic circumstances following the 2008 financial crisis.

The committee had further concerns about the “excessive” remuneration at the helm of the MAS, which had paid out former chief executive Tony Hobman £250,000 a year before benefits and the senior management team a bonus of £100,000 in 2010/11.

It said it recognised that new CEO Rookes had taken a pay-cut compared to her predecessor, but it added: “We regret that the decision to reward the previous chief executive so excessively was taken in the first place and that two members of staff continue to be paid more than the current chief executive. These decisions risk undermining the credibility of the organisation.”

The Treasury sub-committee suggested the independent review should determine whether a statutory organisation such as the MAS should exist.

It said, if it was to exist, the review should look into the role the MAS should play, whether it should it be a co-ordinator, commissioner or direct provider of advice.

It also asked for it to determine whether the Financial Conduct Authority (FCA) may be better placed to take on the service or whether it should have more statutory powers to hold the MAS to account.

It further suggested the review should examine the pay structures of senior staff and whether they are appropriate.