Financial regulator ASIC has been slammed over the collapse of a critical WA coal mine.

Mine operator Griffin Coal went into receivership in September amid mounting losses and debts of almost $1.5 billion. 

Griffin and its corporate owners repeatedly failed to lodge their financial accounts as required by federal law before the collapse.

Liberal MP Steve Thomas has attacked the Australian Securities and Investments Commission (ASIC) over an alleged failure to probe Griffin.

Clean Energy Finance director Tim Buckley has joined the criticism, saying it is inexplicable that ASIC applied so little scrutiny to the company, despite many obvious red flags.

Griffin's collapse has cast doubt on WA's energy security heading into summer.

The mine supplies the privately owned Bluewaters plant, which typically generates about 15 per cent of the electricity used in WA's main grid.

ASIC prosecuted the failures by both Griffin and its lender and operator Oceania Resources, but critics say ASIC’s actions fell woefully short.

Mr Buckley says Griffin struggled to pay its debts as and when they fell due, including to the Australian Taxation Office, indicating that it was insolvent.

He said ASIC should have taken action when the company failed to meet basic requirements of the Corporations Act.

He suggested one of the largest red flags should have been noticed when Griffin's biggest lender - giant Indian bank ICICI - provided a US$60 million loan to the miner through Oceania, despite being owed $1.1 billion by Griffin.

Mr Buckley says ASIC should have sought to hold Griffin and its owners to account, especially given the mine's importance to WA's energy security.

“The structure is entirely unsustainable,” Mr Buckley said.

“It's been unsustainable from the day it was set up. It's been haemorrhaging cash. It's insolvent and only continues at the forbearance of the bank.

“Ultimately, it's just a disaster waiting to happen and Blind Freddy could tell that is the case.

“You would think ASIC would have slightly more understanding of financial rigour than what they clearly are showing.”

Dr Thomas said regulators had failed to provide oversight of Griffin as far back as 2010, when Indian interests bought the mine from former tycoon Ric Stowe's fallen business empire.

He suggested the Foreign Investment Review Board (FIRB) did not properly run the rule over the original purchase, and the inability or unwillingness by ASIC to take a harder line on Griffin since then has only added to the problems.

“What on earth is the Australian Securities and Investments Commission and the Foreign Investment Review Board doing,” Dr Thomas said in parliament.

“I am not sure that FIRB actually knows what it is doing.

“I have some concerns that the Australian Securities Investment Commission is not much better, because the people of Collie deserve better.

“They deserve to know the business structure of the company that is employing hundreds of local people.”

Mr Buckley said ASIC must be properly empowered and given the resources to go after badly run companies.

“ASIC is a toothless tiger when it's contrasted with regulatory leaders like the SEC [Securities and Investments Commission] in America,” Mr Buckley said.

“When the SEC tells corporates or financial institutions to jump they do because they know the SEC has the full brunt of the American government behind them.

“ASIC has a track record that makes no-one fearful of them.”