The Bankruptcy and Diligence (Scotland) Bill proposes introducing a “mental health moratorium” – meaning people suffering from poor mental health would be protected from some debt recovery action while their health improved.

However, the bill proposes that only those subject to compulsory mental health treatment would be protected.

The Parliament’s Economy and Fair Work Committee has called on the government to extend the criteria to include more people experiencing a mental health crisis, so vulnerable people are not left behind by the new scheme.

Economy and Fair Work Committee convener Claire Baker said: “The committee is broadly supportive of this bill and its aims. The idea of a mental health moratorium will be very helpful to those who need it.

“However, we are concerned that the proposed narrow criteria will mean this bill does not help enough people, and the bill should be looked at again with this in mind.

“We are calling on the Scottish government to extend the criteria to allow more people experiencing a mental health crisis to lean on this support. Experts suggested various alternative approaches, and we hope the government will listen to their views.

“We also believe that this is an opportunity to increase the amount protected for debtors during an earnings arrestment, and further protect vulnerable people from destitution.”

The committee also criticised the lack of detail around the proposals made available while it was taking evidence.

Crucial information concerning how the moratorium would work was not made available when the bill was introduced, and more detail won’t be available until the government sets it out in regulations.

The committee heard from public finance minister Tom Arthur that the government would “endeavour” to produce draft regulations ahead of stage 3.

Ms Baker added: ”The committee looks forward to working with the government further on these proposals. The government has indicated they will bring forward draft regulations, and the committee will look carefully at these.

“It is vital that the committee has a chance to scrutinise these regulations before the Bill is passed, so that the detail of these proposals can be fully examined.”