The SNP is facing a “pretty critical moment” with decisive action needed, or it “will be in trouble”, defeated leadership candidate Kate Forbes has said.

The former Holyrood finance secretary, who was defeated by Humza Yousaf in the race to succeed Nicola Sturgeon as SNP leader and Scottish First Minister, spoke out as police investigations into the party’s finances continued.

Former chief executive Peter Murrell – who is married to Ms Sturgeon – has been arrested and questioned, before being later released without charge, with the couple’s home also being searched by officers.

On Tuesday Police Scotland also arrested SNP treasurer Colin Beattie, also the MSP for Midlothian North and Musselburgh, as part of Police Scotland’s ongoing investigation into how more than £600,000 in donations to the party earmarked for an independence referendum had been used.

Kate Forbes was narrowly defeated by Humza Yousaf in the contest to be SNP leader (Andrew Milligan/PA)

With the SNP also confirming it is currently without auditors after accountants Johnston Carmichael quit last year, with no replacement as yet being found, Ms Forbes said there were “questions over integrity, trust, transparency”.

The former finance secretary spoke to BBC Radio 4 in her first broadcast interview since losing the leadership election.

She told the Leading Scotland Where? programme, which airs on Wednesday evening, that “right now, people are watching with astonishment, but they want to see leadership in dealing with it and resolving it”.

Claims about the party’s finances had been “mind-blowing”, she said.

Ms Forbes was clear: “I think we need decisive and quick action or we will be in trouble.”

Speaking about the party’s situation, she added: “I think right now, people are watching with astonishment, but they want to see leadership in dealing with it and resolving it.”

She said that the SNP was “trusted” on various policy areas, adding: “What the people of Scotland want is good education, a good functioning NHS, a growing, well performing economy.

“These are the issues that matter. And if we can fix and sort the problems within our own party quickly and ensure we are delivering on those external issues, then I think we can continue to build on the trust and success.

“The danger will be if there is an absence of decisive and quick action.”

She continued: “We are at a pretty critical moment and it will be the response and the reaction that determines how big a problem this is for the SNP.”

Ms Forbes stated: “Right now with questions over integrity, trust, transparency – I think voters are watching extremely carefully.

“We perhaps have the next election in the early part of next year.

“They will vote in that election on the basis of how we have sorted out our internal problems – even more than that, how we govern.

“There is still time to sort it out. But, I said throughout the campaign, I’m afraid I’m going to say it now – continuity won’t cut it”.

Speaking about Ms Sturgeon and Mr Murrell, she said the couple were “obviously a very good team in the sense of managing the SNP”.

But she added: “There’s no question that since then there have been lots of questions about transparency, the integrity of the systems and structures, and it doesn’t matter how slick the optics are – you need good governance.”