SCOTLAND'S leading business lobbying group has been accused of breaching its Royal Charter by registering with the elections watchdog as a supporter of the campaign against independence.

CBI Scotland is now seeking to reverse its registration following a number of leading organisations, including universities, the BBC and STV, resigning or suspending membership in the past week.

The organisation last night admitted it had failed to abide by its own rules by registering with the Electoral Commission as a Better Together supporter.

Tony Banks, chairman of the pro-independence Business for Scotland group, said: "The story of the CBI's demise has descended from farce into shambles. That the organisation itself was unaware of its own governance procedures has now ground its already-diminished credibility into sand.

"This is the organisation set up in 1926 under Royal Charter to represent business interests across the UK - and including Scotland."

Mr Banks added: "Having created the biggest crisis in the CBI organisation's history and turned it into a public laughing stock, this means that on both sides of the Border no private or public member of the CBI can now credibly remain within the organisation if they wish to be deemed as neutral in the Scottish referendum."

Mr Banks cited a charter that prevented the CBI from making political donations or incurring expenditure in a vote or referendum without a general meeting.

Moreover, he did not believe it would be possible for the CBI to nullify its election registration.

He said: "Our understanding is that the CBI cannot nullify its Electoral Commission registration and must, having been identified as a campaigning organisation, be policed by the Commission during the referendum campaign period, just as we are ourselves will be."

CBI Director-General John Cridland said the group should not have entered the political fray.

He said: "The CBI is politically independent and impartial. Although the decision to register with the Electoral Commission was taken in good faith in order to carry out normal activities during the referendum period, it has inadvertently given the impression that the CBI is a political entity. We are not and never will be.

"We have always said the referendum is a decision for the Scottish people and we're not telling people how to vote.

"However, we do have a legitimate role as the UK's biggest business group in raising important questions on the big issues affecting businesses, jobs and growth."

But Green MSP Patrick Harvie said: "It's good to see the CBI asking for its application to be stopped - however, the shambles over recent days begs a wider question.

"The CBI is clearly not just a business network - it's a free-market, right-wing lobbying group.

"Given the recent exodus of members, the question must now be why public bodies and neutral broadcasters ever joined such a lobby group in the first place."