A full-blown row has broken out between Scotland's top prosecutor and a senior Coalition minister over potential legal action against Fred Goodwin.

Lord Advocate Frank Mulholland hit back yesterday after Business Secretary Vince Cable publicly called for a decision "as soon as possible".

Mr Mulholland warned the Cabinet minister against appearing to seek to influence the process, and rejected complaints by Mr Cable that he had not been kept informed of progress.

He also hit out at Mr Cable for making the call in a letter to his fellow LibDem minister, Advocate General and former Deputy First Minister Lord Wallace of Tankerness – a man he said had no role in the investigation.

However, aides to Mr Cable insisted he had had "no formal update" from the Crown Office in almost a year and a half.

The row centres on the potential prosecution of Fred Goodwin and other former directors of Royal Bank of Scotland (RBS) over the bank's disastrous 2008 collapse.

Mr Cable received legal advice that prosecutions could be possible following a damning report by the financial watchdog, the Financial Services Authority (FSA), that warned poor decisions had triggered RBS's collapse, including the £50 billion takeover of Dutch bank ABN Amro.

Potential prosecutions could look at failures in upholding the duties of a company director, and possibly result in a bar on working in finance.

RBS's collapse meant the bank had to be bailed out by the taxpayer to the tune of £46bn.

While Goodwin lost his knighthood and a significant proportion of his almost £700,000-a-year pension, no senior RBS official has ever been prosecuted.

Although the letter was addressed to the Advocate General, Mr Cable also sent a copy to the Lord Advocate.

In it he wrote that he wanted to maintain public confidence in the Crown Office and that "public and media interest in the banking sector and RBS have not dissipated".

He added: "Given that this matter was referred to them in January 2012, I am very keen for a decision to be reached as quickly as possible in order to maintain public confidence in the efficiency of the decision-making process."

In his statement yesterday Mr Mulholland said: "I am disappointed to hear that the Secretary of State for Business, Innovation & Skills (BIS) has written to the Advocate General in such terms. The Advocate General has no role in the investigation or prosecution of crime in Scotland.

"It would be unfortunate if this were to be construed as attempted interference with independent investigation and prosecutorial decision-making by the law officers. In the wake of widespread public concern about reported issues in the banking sector, I instructed an investigation into allegations involving the Scottish banking sector."

He added: "That investigation has been led by the COPFS Serious and Organised Crime Division. The investigation is complex and ongoing and the volume of material being considered is vast.

"Crown Office officials have kept BIS officials appropriately advised of progress throughout the investigation and confirmed on several occasions that in Scotland it is the Lord Advocate who is the sole prosecuting authority and that he acts independently in the public interest."

Mr Cable has also pressed for directors of the bailed-out Halifax Bank of Scotland to face bans as directors.

The Banking Commission is due to publish its report on the industry in June.