White collar crime advisers are scrambling to divine the direction of corporate crime policy amid mounting expectations that the Government will abandon controversial plans to break up the Serious Fraud Office (SFO).

The coalition Government had planned to split the SFO's prosecution division from its investigation function – a move strongly opposed by the agency and many white collar crime specialists.

However, recent weeks have fuelled mounting expectations that Home Secretary Theresa May (pictured) has abandoned the move amid opposition from cabinet ministers and white collar crime specialists.

May also appeared to row back from plans to break up SFO in a newspaper interview last week, citing "some reservations" about the move, though it remains unclear whether a decision has been abandoned entirely or postponed.

One former SFO official told Legal Week that the agency was now "back to square one". He added: "Instead of creating a single FBI-style body, [the Government] has depleted the capability of the SFO and injured the credibility of senior Government ministers."

Government policy on financial regulation and combating financial crime has gone through a period of sustained upheaval over the last 12 months. Last summer Chancellor George Osborne unveiled plans to create an Economic Crime Agency, which at one point looked likely to encompass the enforcement divisions of the SFO, the Financial Services Authority (FSA) and the Office of Fair Trading (OFT).

However, it was confirmed last autumn that the reformed version of the FSA will retain its enforcement powers, while the Government has since backed away from plans to transfer the OFT's investigatory powers.

Breaking up the SFO would have been a major policy reversal in tackling complex fraud via combined investigations and prosecution – a model imported from the US.

The split, which would have seen the body's prosecution function switch to the Crown Prosecution Service, was also strongly resisted by the SFO and has contributed to a wave of departures from the 300-strong agency.

It remains unclear how the Government intends to proceed with plans for the creation of an FBI-style National Crime Agency (NCA), which at one point looked set to have housed the new anti-fraud body.

Confusion over the direction of white collar crime policy has been strongly criticised by the legal profession – particularly as the SFO is currently charged with implementing enforcement and prosecutions under the Bribery Act.

Linklaters litigation partner and bribery specialist Satindar Dogra commented: "The proposal to split the investigative and prosecuting powers of the SFO has caused a fair amount of concern. A split would be inefficient and would call into question the reliance placed on guidance given by the SFO on important issues, such as self-reporting and the Bribery Act. If the government is indeed now backing away, that is to be welcomed and it may also help with the haemorrhaging of senior staff at the SFO."

Another City litigator commented: "It is time to be extremely critical as to why the Government backed out of creating a super economic agency from the SFO, the FSA enforcement side and the OFT with new powers and the ability to fund itself according to need. So far we have nothing but chaos."

• Click here for Legal Week's in depth feature on financial regulation.