While the eight cents in the dollar payment lifted their payments so far to 78 cents in the dollar, it didn’t diminish their anger over their loss.

Lynette Lee, 70, of Warrnambool, said she and her husband Roger had only got through the past year with the help of their sons who had given them money to survive.

Interest from the Lees’ substantial investment in Banksia had been their sole income and they received a Centrelink payment for only about five weeks.

Roger Lee’s health took a number of downward turns during the year but he has since recovered.

“It’s been a very tough year,” Mrs Lee said. 

She said that while she was pleased to receive the 78 cents in the dollar, she was angry that none of those responsible for Banksia’s crash had been punished.

“It should never have happened,” Mrs Lee said.

David Egerton, 71, of Orford, said he believed the stress caused by Banksia’s collapse had contributed to the heart problems he suffered during the year. “It’s been terrible,” he said of the past 12 months. “My health is fragile.”

Mr Egerton lost tens of thousands of dollars in interest from his investments that were intended to give him and his wife a comfortable retirement.

Mr Egerton said he had “sort of survived” the past year because he gained a part-pension and had lived frugally.

Banksia’s collapse in October last year followed the death of Mr Egerton’s wife and he struggled to pay for her funeral expenses without access to his funds in Banksia.

His financial situation was also complicated because he had also invested in another non-bank debenture issuer, Southern Finance, that froze funds for a month last year following a run on its cash reserves after Banksia’s collapse.

Southern Finance eventually sold to the Bendigo and Adelaide Bank and repaid all investors.

Mr Egerton also lost funds when a Queensland-based mortgage fund collapsed in 2011.

He praised Banksia’s receivers McGrathNichol for the return they had managed to give investors, saying he had yet to receive anything from the receivers of the Queensland-based mortgage fund. South-west Banksia investors support group chairman Russ Goodear said many of the 16,000 Victorian investors in the failed company were retired or “mum and dad” investors.

“They are good old battling Aussies, rural people who are not wealthy,” he said.

“A lot of people relied on Banksia for their income.”

Mr Goodear had a large amount of his superannuation invested in Banksia and was shocked when initially told he might only get back 30-40 cents in the dollar.

He managed through the year because he still worked but others were not as fortunate.

However, he said the 78 cents in the dollar received so far was much better than that initial estimate, due in large part to receivers McGrathNicol taking on board investors’ willingness to wait for a higher return.

McGrathNicol have indicated total repayments might be as high as 85 cents in the dollar.

A class action in the Supreme Court against Banksia, its trust company and chartered accountants might deliver a further return but the solicitor handling the case said a trial was unlikely to start until late next year at the earliest. 

Mr Goodear said while there was a prospect investors might recover their principal, the loss of interest gave them a scenario comparable to keeping their money ‘under the pillow’.

He was concerned the Australian Secur-ities and Investments Commission (ASIC) had yet to put in place measures that could safeguard against collapses such as Banksia.

“These organisations need to show far more responsibility. The government and ASIC must ensure this never happens again.”

Another local Banksia investor keen for more safeguards is Brian Thomas, 60, of Dennington, who said he had invested in Banksia because he believed it had the same protection as banks.

Mr Thomas, who receives a Newstart payment, said he had been spared from financial hardship because he transferred most of his money from Banksia to superannuation funds shortly before the collapse.

“If I had left it in there I would have had to sell the house,” he said.

A Banksia investor who did not wish to be named said she had money in both Banksia and Southern Finance and their travails had led her to since invest only in banks.

Banksia’s collapse prompted ASIC to this year put forward proposals to strengthen the regulation of the debenture sector, including introducing minimum capital and liquidity requirements. 

These requirements for non-bank debenture issuers, such as Banksia, are presently recommended but not mandatory.

Submissions to the consultation paper closed in early April but there has been no move since to bring in the mandatory requirements suggested.

An ASIC spokesman said it had been discussing the proposals with federal Treasury and the Australian Prudential Regulation Authority (APRA).

APRA safeguards investments in banks, credit unions and other authorised deposit-taking institutions by requiring them to maintain certain levels of capital to protect against bad loans.

However, any strengthening of regulation of the debenture sector is likely to have to wait until the outcome of the inquiry into Australia’s financial system, due to be handed down late next year.

When ASIC Commissioner John Price released the proposals, he cautioned that while they would ensure debenture issuers were more financially resilient, they would not prevent failures.

“It is important to understand debenture investments are higher risk than a deposit with a bank, building society or credit union that is prudentially supervised by APRA,’ Mr Price said.