However, a PIA board meeting yesterday put off a decision until the new year so that legal advice can be sought.
It is understood that the delay was caused by some board members who argue that a public interest majority would sound the death-knell for the principle of self-regulation, which they believe is enshrined under the 1986 Financial Services Act.
Joe Palmer, PIA chairman, said: 'It is the case that governance was discussed at the board today. We had a good and wide-ranging discussion which was adjourned for completion next month.
'There are still large aspects to be discussed again. We have reached decisions on part of it. But there are a number of different factors to consider.'
Calls for consumer representatives to dominate the new watchdog's governing body were first raised in January by Andrew Large, chairman of the City's lead regulator, the Securities and Investments Board.
Mr Large has been strongly opposed by sections of the industry that believe they are best suited to police themselves. But the current pension transfer scandal, in which some 400,000 savers may have suffered because of inadequate advice or poor record-keeping, has weakened the opposition.
Proposals for the PIA, which is due to launch its prospectus early next year, envisaged an 18-strong board, of whom eight would represent the public interest. Some of those would have been retired figures within the industry.
The remainder would have been split among different groups within the industry, including insurance and unit trust companies and financial advisers.
The proposal being discussed yesterday would reverse that total, giving consumer representatives a ten to eight majority.Reuse content