Senior civil servant, Ann Chant, who headed the quinquennial review, says the Public Trust Office has not come up to scratch in terms of efficiency and performance in client services since it became an executive agency in 1994.
The report demands that the PTO be stripped of its key functions, such as fund management, which should instead be carried out by the private financial services sector. Local solicitors, the report says, could carry out trust and receivership work.
In February, the PTO was savaged in a report from the National Audit Office for its poor accountancy policies and the "disappointing" performance of patients' investment portfolios.
The Lord Chancellor blames restrictive working practices and procedures for the PTO's failure to operate as expected, and agrees radical change is required.
He says he will publish a detailed response to the quinquennial review early next year