The Treasury said the treatment of those in debt would be the subject of a consultation, to become law by 2019. It suggested that those affected by debt may be exempt from further interest and charges for a period of time, allowing them to seek advice.

The amendment has come after rebels in the House of Lords threatened to vote down the bill.

The rebels were led by Baroness Ros Altmann, former pensions minister. She said yesterday that the Lords were proposing three major amendments, including a ban on pensions cold calling, and mandatory guidance before transferring out of a pension, plus this special ‘duty of care’ clause for vulnerable customers who need help with their financial affairs.

The Department for Work and Pensions has agreed to a cold-calling ban in principle, but no date has been set for implementation. Altmann said on her blog yesterday: “Having announced it wants to ban pensions cold-calling and introduce breathing space for people with unmanageable debts to help reschedule their payments, it is hard to understand why Ministers are refusing to agree to introduce the necessary legislation in the Bill now going through Parliament. Yet there is widespread support for this ban, across all political parties, consumers groups and providers.”

Jane Goodland, Old Mutual Wealth responsible business director, said: “Whilst breathing space for those struggling with problem debt is welcome, we cannot avoid tackling the fundamental issue of a massive gap in UK financial capability.

“The new ‘breathing space’ scheme  is yet another example of symptomatic treatment of consumer financial problems. In recent years we have seen numerous interventions designed to tackle the consequences of financial difficulty, from the FCA stepping-in to cap payday lending costs to a ban on pension cold-calling.

“These measures are admirable and will help protect vulnerable consumers. Nonetheless, they are a sticking-plaster to the symptoms of a lack of knowledge and capability when it comes to managing our financial lives.”