Helena Wiesner, deputy chairwoman of the Personal Investment Authority, urged the Government to reconsider its plans or face the likelihood that many customers would end up with the wrong savings vehicle.
She said the plans would deprive consumers of valuable advice, putting them in danger of saving their money in a government-approved vehicle that was wrong for their needs.
Ms Wiesner said: "When the products in question have government backing I fear that wrong decisions could be made in many cases. I marvel at the courage of the Treasury to put itself firmly in the front line should we end up with a misbuying scandal."
Under the proposals, the Treasury will give approval to Individual Savings Accounts involving cash, insurance or unit trusts which track the FTSE 100 index. The accounts, to be introduced next April, must have low costs to get Treasury approval.
Ms Wiesner fears the low charges will leave no room for advice needed to protect their savings. "It is a major gap in the Government's initiative," she said. "People could be seduced through the Government backing to put their pounds 1,000 into, for example, life insurance. If, as they have, people stop their premiums and don't get very much back, there will be a lot of very upset people.
"People will be left with a raw deal and they will have no-one to blame but the Treasury."
Ms Wiesner stressed she was speaking in a personal capacity and not as a representative of the PIA.