ASIC cancels the AFS licence of Banksia Mortgages in line with the collapse of the latter's parent firm.

The Australian Securities and Investments Commission has cancelled the Australian financial services licence of a local bank in line with its parent firm's collapse in 2012.

Banksia Mortgages is one of four subsidiaries of Victoria-based Banksia Financial Group which fell into debt two years ago. The others were Banksia Securities, Cherry Fund Limited and BFG Management.

The company self-reported a breach of its AFS licensee financial requirements in April 2013 but the ASIC had decided against taking action at that time. Instead, the regulator closely monitored the company as it wound up the Banksia Mortgage Fund, which the ASIC said was the best option to maximum investor return. Banksia Securities has been financially supporting Banksia Mortgages since the collapse so it can continue operating. 

In December 2013, the sale of Banksia Mortgage Fund's portfolio fetched A$85 million which was distributed to 1,200 investors. In April 2014, the company then applied to the ASIC to cancel its AFS licence to minimise costs and allow it transfer money to its securities counterpart. The ASIC said that most of the investors had already gotten 100 per cent of their money back and only around 108 have yet to see a full return. 

ASIC's investigation into the Banksia Financial collapse continues.