Federal Labor has seized on reports the government is in secret talks with Australia's banks about an inquiry by the corporate regulator aimed at heading off its own plan for a royal commission.
Opposition Leader Bill Shorten on Monday demanded the Turnbull government set aside a full day of parliament on Wednesday to debate the need for a royal commission.
"Anything less than a royal commission into misconduct in the banking and financial services industries amounts to a cover-up orchestrated by the prime minister and the Liberal government," he told parliament.
The government used it numbers to block the move, but not before Mr Shorten accused Prime Minister Malcolm Turnbull and Treasurer Scott Morrison of "colluding with the banks to concoct a plan to tempt them from a royal commission".
Australia had one of the strongest banking systems in the world, the opposition leader said.
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"But we need Australians to have confidence to uncover and deal with unethical behaviour."
Mr Turnbull has refused to say whether the government has been talking to the banks about holding an inquiry by the Australian Securities and Investments Commission.
"We talk to the banks all the time," he told ABC TV on Sunday night.
The treasurer has the power to order ASIC to conduct an inquiry in the public interest.
