NICOLA Sturgeon has denied having any prior knowledge of a scandal which led to one of her most prominent MPs stepping down from the party.

The First Minister, speaking at Holyrood, said that "serious issues" had been raised around the conduct of Michelle Thomson and said that a police investigation should be allowed to take its course.

She added that the SNP did not know about questionable property deals, signalling that Ms Thomson, who denies any wrongdoing, did not declare her activities prior to being selected as a candidate.

Ms Thomson, the Edinburgh West MP, left the party whip on Tuesday after that it emerged that police were investigating a string of property deals in 2010 and 2011. Her solicitor was struck off for his part in the transactions, which a ruling said may have constituted mortgage fraud.

Ms Sturgeon said: "Serious issues have been raised here. Michelle Thomson maintains that all of her business dealings were entirely within the law. She's herself as I understand it not under investigation by the police at this stage. She's decided that she wants to step aside from the SNP until this investigation has concluded and I think that's the right thing for her to do.

Asked whether the episode was embarrassing for the SNP, the First Minister said: "I don't want to be in a situation where any elected representative is stepping aside because there is an investigation of any nature into aspects of their business dealings, so clearly, it's not a situation I would have chosen."

The move to withdraw from the SNP party whip at Westminster means Ms Thomson will effectively sit as an independent and no longer serve as spokeswoman for Business, Innovation and Skills,