ASIC was allegedly informed about the precarious position of Banksia, and a subsidiary Statewide Secured Investments 18 months ago, according to NSW property developer David Hawkins who was involved in litigation with the firm.
"The regulator has been on to them for about 18 months ... (but) ASIC have sat on their hands," Mr Hawkins claimed.
"Ive been waging war against them (Banksia), as have about four other people in relation to their lending practices," he said.
He claimed Statewide had contested liabilities of $28-$30 million at the time but Banksia had insisted it would not inherit the firm's debt, even though it provided security for costs in a number of court cases.
Mr Hawkins said major residential, hotel and commercial developments in Sydney had faced multi-million dollar valuation and financing problems, helping to bring the collapse on.
ASIC said it was "aware" of yesterday's developments with Banksia but did not disclose when it was first notified about the financial group's problems.
ASIC spokesman Andre Khoury said the commission was "actively engaged" with Banksia's trustee and receiver.
Mr Khoury said ASIC was not a prudential regulator.
"ASIC’s historical work in this sector reflects the fact that a disclosure regime is in place for debentures, coupled with the requirement that a trustee is in place to monitor the issuer and seek to protect the interests of debenture holders," Mr Khoury said.
Banksia appointed receivers yesterday owing investors $660 million.
Banksia fell into receivership after a recent review of its non-performing loans.
About 3000 investors in eight towns and cities in regional Victoria have had their investments frozen while receivers McGrathNicol work their way through the non-bank lender's accounts.
About 100 workers also are set to lose their jobs.
The collapse has shocked communities across the state.
Kyabram resident Jason Dunn said the town was reeling.
"People are in tears," he said.
He said many locals feared they would lose their retirement fund.
"People who worked hard all their life have just lost the lot. It's really going to affect the town. It's a black day here," he said.
Kyabram local Lynne, 50, opened up an account two weeks ago with about $8000 for a holiday.
"I'm devastated, but I got off lightly," said Lynne, who asked that her surname not be used.
"One retired lady lost the lot - $400,000. Now it has probably just gone, disappeared like that," she said.
She said Banksia was an institution that locals had trusted.
The pastor of Kyabram Baptist Church, Robert Arnold, said it was likely the church would lose money.
He said there had been no warning signs that the firm was in trouble.
"Our banking goes through them," Mr Arnold, 70, said.
"It has come as a shock. I would have thought it would have been pretty well managed."
Victorian Farmers Federation vice president Peter Tuohey said farmers had been hit by the collapse.
“Farmers are just trying to recoup after going through a lot of pretty tough years," he told 3AW today.
"A few farmers that have got a few savings and put away carefully in a local investment company - it’s going to hurt them pretty dearly so (it will) really set the whole area back."
Victorian Shadow Minister for Finance Robin Scott said the collapse was a terrible blow for families, particularly in regional Victoria.
“The Opposition fears that the collapse will have a negative impact on local economic activity and employment,” he said.
“The Victorian Government needs to step in and assist those communities most impacted by the collapse."
Shadow Treasurer Joe Hockey said the Federal Opposition was "desperately trying to find out much more on how Banksia was structured".
"I think it's important to recognise that if an institution is not supervised by APRA, if it's not an authorised deposit-taking institution then there is a certain amount of risk," he told 3AW.
"When someone advertises themselves as a non-bank lender or as a non-bank financial institution then the money is at risk."
Banksia, which was founded in Kyabram, offered investment products including fixed-term, superannuation and pensioner deeming accounts and mortgage schemes.
Banksia has a network of 14 branches across Victoria, NSW and SA with headquarters in Melbourne.
Its other Victorian branches are in Echuca, Ballarat, Bendigo, Geelong, Shepparton, Tatura and Warrnambool.
Campaspe Shire chief exeuctive officer Keith Baillie said there were a lot of nervous people in northern Victoria after the shock announcement.
"News of the challenges being faced by Banksia Securities has resulted in many Shire of Campaspe residents, along with thousands of Victorians, facing an anxious wait as receivers are appointed and future plans are determined," Mr Baillie told The Weekly Times.
"Our concern is the impact on not only the investors but the staff employed at the Kyabram and Echuca offices, with Kyabram supporting Banksia's administration office.
"The impact will be felt across our urban and rural communities and we now await details as the receivers work through the required processes and to what assistance may be available."
McGrathNicol receiver Tony McGrath said it was too early to know what caused the collapse.
He said an urgent review of Banksia's financial position, loan book and properties was under way.
"Our primary concern is to ensure the interests of debenture holders are being protected," Mr McGrath said.
Staff will work on during the review.
The group, which bills itself as a "non-bank alternative", was founded as Kyabram Housing Investments by Patrick Godfrey in 1968. In 1999, it merged with other small investment companies to form The Banksia Financial Group.
Mr Godfrey stepped down as chief executive in August and was replaced by Warren Shaw, a former National Australia Bank general manager in charge of overseeing its retail branches.
Mr Godfrey continues to serve as a board member.
heraldsun.com.au 26 Oct 2012
Another corporate fraud where the masses suffer financial losses, under the ever so watchful government institution, ASIC.
Australia, truly the lucky country (Disclaimer: If you are a part of the fraudulent corporate elite).
Now it's time to sit back and watch the courtroom frace.