A consultation paper on removing the insurance claims handling exemption from the financial service definition is to be released this week as part of the Government’s response to the Hayne royal commission’s recommendations.

Treasurer Josh Frydenberg says the Financial Services Reform Implementation Taskforce is preparing the paper.

The Government is also acting on a recommendation to require companies to co-operate with the Australian Financial Complaints Authority, with a regulation to be finalised next month.

“This recommendation can be achieved by making a regulation, which does not require the Parliament to be in session,” Mr Frydenberg said.

Parliament adjourned last week until April, when both houses will briefly return for a federal budget sitting brought forward to allow for an expected May election.

The political timetable means royal commission measures requiring parliamentary approval will likely be delayed until at least the second half of the year.

The Australian Labor Party last week drafted its own legislation to remove the insurance claims handling exemption and called for the Government to support it as a matter of urgency following the Townsville floods.

Including claims handing in the financial service definition would ensure it is covered by the obligation to act “efficiently, honestly and fairly”.

Opposition Leader Bill Shorten said during question time in Parliamentlast week that “the terrible, devastating floods recently in Townsville – and, indeed, throughout north Queensland – [has resulted in] thousands of Australians…making insurance claims for damage to houses, to livestock and other losses.”