The unravelling of the CBI's stance over the independence referendum has been an extraordinary fiasco.

It is one that raises serious questions about the organisation's leadership.

Almost exactly a week after it announced it was to register with the Electoral Commission in order to be able to exceed £10,000 in campaign cash in support of the Union, it has returned to the commission, asking if its registration can be withdrawn.

Director General John Cridland maintains the CBI was not attempting to influence how people vote and should never have applied to register. The CBI in Scotland is politically impartial, he says. This will come as a surprise to many observers. Only a few days ago, Mr Cridland was telling journalists the economic case for independence had not been made and that the CBI believed the Scottish and UK economies were stronger together. CBI director Iain McMillan has been equally vocal about his view that independence will be disastrous for business.

But it is notable that the prominent members who have deserted the CBI over the course of the past week have, most commonly, done so not because they support independence, although some do. Instead, the biggest motivating factor for departees has been anger or, at the very least, concern about the effect the organisation's newly official ties to the No campaign would have on their impartiality. Universities, broadcasters, the Law Society of Scotland and others have left because they felt the CBI was calling into question their organisations' neutrality on the issue. Did no-one see this coming? Did nobody at the CBI think to consult members about whether it should make this move?

Others had certainly wondered. The pro-independence Business for Scotland has been pressurising the CBI about whether it can demonstrate that its public views represent those of its membership. At the very least, there should have been some communication so that members of the CBI were made aware of the actions the board was taking and could plan a response, thus avoiding the panicked public exits that have so damaged the organisation's credibility.

The Electoral Commission will examine whether it is possible for the CBI's registration to be withdrawn under the law as it stands while the CBI has said it will not undertake any campaigning that would breach the rules.

Whatever the outcome, Mr McMillan, Mr Cridland and the remainder of the CBI's leadership will have to answer the question of why this entire episode was badly misjudged. It is not just CBI members who want to know. The organisation's reputation has been badly damaged and a price has also been paid in lost subscriptions. All in all, it has been a sorry business.