Consumer advocates say a Supreme Court case involving a financial planner underscores the need for a fund of last resort for people who have lost money through poor financial advice.

Key points: Advocates want a compensation fund of last resort set up for victims

Advocates want a compensation fund of last resort set up for victims They want the funds available to victims over the past decade

They want the funds available to victims over the past decade The calls were prompted by a court case against financial planner Steve Navra

NSW residents Trypheyna and Alex McShane lost their home, superannuation and savings after a string of failed investments they made through financial planner Steve Navra.

Mr Navra liquidated his businesses in 2011 and went bankrupt in 2012.

The McShanes lodged their case against Mr Navra in the NSW Supreme Court in 2012, pursuing the claim even after their lawyers pulled out at the eleventh hour.

The McShanes have now reached a settlement, funded by Mr Navra's business insurer.

"I realised that the reason we were continuing to do this was not about the money, it was about the injustice," Ms McShane told the ABC.

Other clients will be out of pocket

But dozens of other former clients will receive only a fraction of what they are claiming.

While Navra Financial Services was insured for varying amounts in different years, ranging from $4 million to $8 million, the company managed sums of money totalling far more than that for up to 500 clients.

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Last year, a settlement scheme was set up through the Navra Group's insurers and liquidators in the Federal Court, separate to the McShane's case.

This was to deal with claims from other former clients. So far, 82 people have applied for a share in $4 million worth of insurance.

The ABC understands their total claims amount to $30 million, meaning the insurance will fall well short of what is claimed.

The McShanes were in a better position simply by having launched their claim before the other investors.

Tryphena McShane said she was devastated that other people, including her brother and another close friend, will receive only small settlement amounts.

"Everything feels very hollow. The biggest victory will be to no longer ever have to think about any of this again," Ms McShane said.

The McShanes lost their savings through failed investments. ( ABC News: Simon Beardsell )

Advocates want 'compensation fund of last resort'

The case is an example of how some investors who lose their money when relying on poor financial advice are unable to get appropriate compensation.

At least 20 people complained to the Financial Ombudsman's Service in 2011 about Navra Financial Services.

Within months, Mr Navra was bankrupt, which put a stop to that avenue for consumers pursuing financial redress.

The only option now is for aggrieved consumers to go through the courts, and it is now clear that the insurance is unlikely to cover all the claims.

Gerard Brody from the Consumer Action Law Centre (CALC) wants a compensation scheme of last resort for people who have lost money in these circumstances.

"It would be available for those who have suffered loss and have succeeded in getting an award because of negligent financial advice or a breach of law, through the Financial Ombudsman's scheme or a court," Mr Brody told the ABC.

"They would first have to call on professional indemnity insurance and if not, they could call on this compensation scheme, hence it being last resort.

"I think professional indemnity insurance has a really important role to play in compensating consumers, but I think we've got to acknowledge that it can't play the full role itself."

Fund must cover victims over past decade

Susie Bennell runs Sydney consumer advocacy firm The SR Group, working on cases ranging from financial fraud to the maladministration of loans and helping lodge claims through the Financial Ombudsman.

She said any compensation scheme "must be retrospective".

"For the past 10 years victims of financial fraud from within the financial industry have no form of financial redress," Ms Bennell said.

"What is mooted is a potential victims compensation fund going forward but all of my clients need to be assisted through a retrospective fund."

Mr Navra was discharged from his bankruptcy last year and has since been selling property in Melbourne.

He declined requests for an interview and said all the advice was given to the best of his ability at the time.

He said he had adequate insurance for the scope and nature of his business, and that he too had lost considerable funds of his own on these investments.