Labour has announced plans to ban certain insurance products sold at vehicle dealerships and prohibit undisclosed commissions, framing the policy as consumer protection for families being pushed deeper into debt.
For anyone operating in or around vehicle add-on lines, the announcement is less a surprise than a political catch-up to a regulatory conversation that has been running for years.
Labour leader Chris Hipkins and Manurewa MP Arena Williams announced the "Fair Go" law on October 1, 2026, at the Māngere Budgeting Services Trust in South Auckland, according to Te Ao Māori News.
Under the proposal, businesses selling insurance alongside vehicle purchases would need to disclose the full cost upfront. Undisclosed commissions would be banned, and sellers would be required to show the total cost of a vehicle and its finance across the life of the loan.
Williams said families had walked into dealerships expecting to spend between $13,000 and $15,000 on a basic vehicle, only to face total repayments exceeding $50,000.
"You can no longer sell junk insurance, and the fees that are going to add on over time have to make sense. They have to be advertised clearly at the start so whānau can compare and contrast and get the best deal," she said.
Lara Dolan of the Māngere Budgeting Services Trust backed the intent. "Any policy that's going to reduce the level of debt people get themselves into is a step in the right direction," Dolan said.
The proposal has not been drafted into legislation. Its final scope would depend on Labour forming a government after the November 7 election.
The Financial Markets Authority (FMA) published a thematic review of add-on insurance and extended warranties in August 2026, examining nine insurers across products including mechanical breakdown insurance (MBI), guaranteed asset protection (GAP) insurance and payment protection insurance (PPI).
The review identified four key concerns. Sales practices and distribution arrangements may not consistently support informed consumer decision-making. Consumers may buy products that do not meet their needs or expectations, or without fully understanding them. And insurers are not consistently identifying and responding to emerging conduct risks.
Distribution oversight was the area where the FMA said the industry most needed to improve. Insurers described onboarding and training arrangements for intermediaries, but the review found limited evidence of monitoring and oversight proportionate to the risks of commission-based and intermediated sales models.
FMA director Michael Hewes was clear about where responsibility sits. "Where products are sold through intermediaries, insurers still need robust systems, controls, and monitoring to ensure consumers are treated fairly. We saw a recurring gap between the policies, processes, systems, and controls insurers described and how they operated in practice," Hewes said.
The Commerce Commission's 2021 Motor Vehicle Financing and Add-ons Review covered the same channel and reached similar conclusions. The Commission found that some consumers either did not understand the add-on product they had bought, or were not aware they had bought one at all. It noted that dealers earn commissions on add-on sales while also being responsible for assessing whether the products suit the consumer, a structural conflict the Commission flagged directly.
The Imported Motor Vehicle Industry Association (VIA) responded to the FMA review in August 2026, arguing the findings should not be read as a verdict against dealer-sold products as a category.
VIA chief executive Greig Epps said the point-of-sale model can work for consumers when conducted properly. "There's nothing inherently wrong with that model provided customers understand what they are being offered, know the product is optional, understand the benefits and any limitations and exclusions, and are making a genuine choice," Epps said.
He drew a line between fixing conduct problems and removing the model entirely. "We would be concerned if isolated examples of poor conduct were used to justify broad regulation that imposes significant cost on responsible businesses or reduces access to products that provide genuine consumer protection," he said.
The 2024 New Zealand Consumer Survey found Māori were more likely than average to report being deceived: 22% by overseas businesses and 16% by New Zealand businesses. Pacific respondents reported being deceived by overseas businesses at a rate of 23%, according to Te Ao Māori News. Labour made its announcement in South Auckland, where budgeting services report high levels of consumer debt among the communities they serve.
Labour's commission proposal maps directly onto conduct concerns the FMA has already raised. Since the FMA took over responsibility for the Credit Contracts and Consumer Finance Act (CCCFA) on July 1, 2026, consumer lending conduct and insurance conduct have sat under the same regulator. Dealer finance and the add-on insurance sold alongside it now fall within a single supervisory view.
Whoever wins the election, the regulatory direction is already set. Under the Conduct of Financial Institutions (CoFI) regime, insurers are responsible for how their products are sold through intermediaries, including dealers, and their fair conduct programmes must cover those distribution arrangements. The FMA's review found that oversight is where insurers are falling short.
For insurers, that means reviewing how they monitor intermediary sales, not just how they train for them. For brokers and dealers distributing add-on products, it means expecting closer scrutiny of disclosure practices and commission arrangements from the insurers they sell for, whether or not Labour's proposal becomes law.
