Backflip on inquiry into banks

A STRONGARMED Turnbull Government was last night on the brink of supporting an inquiry into banks in a bid to limit political embarrassment and earn the praises of voters.

The shock backflip could be as early as today. Conversations were continuing late yesterday between the offices of the PM, Treasurer Scott Morrison, Financial Services Minister Kelly O’Dwyer, Nationals’ Parliamentary Leader Nigel Scullion and Senator Barry O’Sullivan.

Concerns have consumed Cabinet ministers because if Parliament passes the Bill, it will need the executive to appropriate funds for an inquiry.

Privately, highly placed sources have conceded they will be punished by voters if the Government refuses to fund an inquiry into the banks.

It comes as taxpayers and the financial industry face tipping in $ 20 million to pay out hundreds of Australians ripped off by greedy brokers and financial advisers under an expedited plan being worked on by the Government.

Mr Morrison, still working on the compensation blueprint yesterday, could also take a plan to the expenditure review committee today. It is understood the Government has conceded there are hundreds of cases identified by the Financial Services Ombudsman that need to be redressed. The cost is expected to range from $ 10 million to $ 20 million.

The sticking point for the Government is whether the banks pay it all or taxpayers also chip in. Banks met with the Treasurer this week. It is understood they are supportive of helping to fork out cash for the compensation scheme.

The plan for a “compensation scheme of last resort” was recommended by an independent review.