NCH Action Scotland, the group which is to lead the initiative launched last week, believes the hearings have moved away from the principles set out by Lord Kilbrandon, their founding father.
Maggie Mellon, NCH Action Scotland's head of policy, said: "Kilbrandon proposed a social education system. It was the Government which chose to put the panel system with social work. It's NCH Scotland's view that it would have been better with education.
"Schools are such a big part of children's lives and they are better placed to take a broad view of the lives of children and their families than social workers - and to make effective links between schools and homes."
John Scott, of the Scottish Human Rights Centre, who is a member of the advisory panel, agrees that the panel system should be brought into the education service. "Putting panels alongside social work has been the slippery slope to a less effective way of doing things," he said.
NCH Action Scotland had decided on an inquiry because the hearings system has never been assessed and evaluated, Ms Mellon said. New ways of dealing with teenage offenders from 15-year-olds upwards, fast-track children's hearings and youth courts, are now the subject of pilot schemes by the Scottish Executive. But Ms Mellon was unenthusiastic about these, saying:
"What is the point of fast-tracking a 15-year-old? What we need is early intervention. We need to fast-track eight-year-olds."
The advisory panel is expected to come up with a report to be presented to Parliament next autumn.
The Rev Richard Holloway, the former Episcopalian Bishop of Edinburgh, said: "The children's hearings system is an institution which has come under some fire.
"What Scotland does about the question of young people in trouble, and about youth crime, is a very important one. It will be a huge test of the Parliament."