Yes! The point is if ##\xi## is denerate there should be another observable ##\eta## that's compatible with it, i.e., the self-adjoint operators commute. It should be also independent of ##\xi##, i.e., it shouldn't simply be a self-adjoint operator function of ##\xi##. Then there's a common set of eigenvectors. If the simultaneous eigenspaces are all one-dimensional, then you have a complete compatible set of observables, otherwise there must be more compatible observables.
E.g., for a single non-relativistic particle with spin, a complete basis of generalized eigenvectors ##|\vec{p},\sigma_z \rangle## with ##\vec{p} \in \mathbb{R}^3## the momentum of the particle and ##\sigma_z \in \{-s,-s+1,\ldots,s-1,s \}##, where ##s \in \{0,1/2,1,\ldots \}## is the spin of the particle (##s=1/2## for an electron). Thus the three components of the momentum of the momentum and the spin and magnetic quantum number are a complete set of observables for a single non-relativistic particle.