LORD McConnell has warned against a witchhunt as he refused to join the growing clamour for former Royal Bank of Scotland chief executive Sir Fred Goodwin to be stripped of his knighthood.

The former First Minister, whose government nominated Sir Fred for the honour in 2004, said he was not the only person to blame for the collapse of the bank, which had to be bailed out with £45 billion of taxpayers' money four years later.

On a visit to a Glasgow school yesterday, the Labour peer said: "There needs to be an open, transparent process and I don't think that should be done by day-to-day headlines. The reasons for what happened at the banks are more complex than just one person.

"Fred Goodwin made mistakes, but so did a lot of other people at RBS, including people on the board who also have honours. They appointed him and agreed the strategy and have never been held to account."

Lord McConnell pointed out the Coalition and previous Labour and Conservative governments had made mistakes on bank regulation.

He added: "I sympathise with the public concern on this issue, but if you are going to have a system that is relatively independent and fair in allocating these awards, then you need to have system that is independent and fair in looking at removing them."

The Honours Forefiture Committee, made up of senior civil servants, is expected to review Sir Fred's knighthood in the coming days; their recommendation goes via the Prime Minister to the Queen.

The Scottish Executive in 2004 headed by Jack McConnell had nominated the former RBS chief for a knighthood, which he subsequently received for "services to banking".

But it is still unclear who was behind the nomination and what the precise reasons were for it being made.

It is thought Sir Fred's honour was referred to the Forfeiture Committee by the Treasury.

In 2009, senior civil servants considered a request from the former Labour MP Gordon Prentice that the ex-RBS boss should lose his honour, but turned it down.

During a Commons committee investigation of the honours system that year, a member of the panel which had agreed the knighthood defended the decision. Dame Stephanie "Steve" Shirley said: "I must have been on the committee when he went through. At the time, he looked like an outstandingly good candidate."

At Westminster, the political pressure for Sir Fred to lose his knighthood intensified. Ed Miliband, the Labour leader, threw his weight behind calls for the former RBS boss to be stripped of the honour.

He admitted his party had been wrong to recommend him, saying: "It was clearly wrong for him to be given a knighthood, knowing what we know now about the damage he caused not just to RBS but to hard-pressed ordinary families up and down Britain who are now paying the price of his failure.

"It's right it should be revoked. There is a widespread recognition of the damage Fred Goodwin caused and the privilege of a knighthood is a privilege you should only continue to enjoy if you haven't done such damage to the British economy."

Mr Miliband added that what sympathy there was for Sir Fred was reduced still further because he failed to show "great remorse" or accept he was to blame for what had happened.

Meantime, Matthew Hancock, a Conservative backbencher, yesterday tabled a parliamentary motion, which said that in the light of the Scottish bank having received the world's biggest bailout of £45.5bn – more than £2300 for each family in the UK – and in the light of his "overwhelming failure of top-level corporate governance", it was "perverse and unacceptble" for Sir Fred to keep his honour.

He called for the ex-banker to forfeit his knighthood "so as to better reflect the severity of his actions and depth of his management failure".