A royal commission into Australia’s banks – which would also have involved the life insurance industry – was narrowly avoided last week as politicians in the House of Representatives staged a series of strategic manoeuvres.

The push for the royal commission started in the Senate, where Labor’s Penny Wong moved a motion to establish it.

Senator Wong said the inquiry would examine “confidence and trust in the financial services industry”, which has been “shaken by ongoing revelations of scandals that have resulted in tens of thousands of Australians being ripped off”.

Victims included “life insurance policyholders who have been denied justice”.

The Coalition rejected the move, arguing it would cover old ground and delay forthcoming legislation on the financial services industry – an obvious reference to the Life Insurance Framework bill that was lost when Parliament was dissolved earlier this year.

After debate on which additional financial services should be included, the motion was passed.

When it was put to the House of Representatives, the opposition won the vote with a majority of one while a number of Coalition members were absent.

A second vote on an amendment to the motion resulted in a tie, and was lost only when the Speaker cast his vote with the Coalition.

While Labor has lost this skirmish, Opposition Leader Bill Shorten has promised to keep fighting.

“We will never, never, never give up seeking a banking royal commission,” he told the House. “In our time in government, they opposed every reform we made to financial services.

“You can see the fingernail marks in the concrete as they are dragged kicking and screaming to action on reform of banking.”

Financial Services Minister Kelly O’Dwyer accepts there are problems in the financial services sector, but argues forthcoming legislation will tackle it.

“We know that the sector has not always lived up to the expectations of the Australian people,” she told the House. “That is why it is this side of the House that is delivering the most significant package of reforms this Parliament has seen.”

Ms O’Dwyer says legislation that would be stalled includes life insurance reform and professional standards for financial advisers.