New Zealand’s Labour Party plans to ban "junk" add-on car insurance including paint and mechanical breakdown cover “that excludes almost everything that could break down”, if it wins the November election. 

Car sellers, before customers sign up for a car sold with credit or insurance, would be required to show the total cost over the life of an agreement.  

Labour says it would ban “secret commissions”, including flex arrangements that allow dealers to increase a loan interest rate in exchange for a bigger commission and would give customers 14 days to cancel cover bought at a car yard without penalty. 

Party leader Chris Hipkins says people are being hit by hidden fees in a number of areas. 

“The gym membership with surprise fees, the meal kit subscription that's impossible to cancel, the worthless insurance on your new car,” he said. “It's more than just frustrating, it's a real burden on families who are already struggling with the high cost of living. Labour will put a stop to it.” 

A Financial Markets Authority review of add-on insurance this year found shortcomings disadvantaging consumers, singling out oversight of distribution partners as an area of concern. 

“Add-on insurance products are commonly sold through intermediaries who generally do not provide financial advice on the product and are often remunerated through commission-based arrangements,” it said. 

“These characteristics can create conduct risks where consumers may have limited time or information to assess whether a product meets their requirements, understand key features or exclusions, or make a fully informed decision about purchasing it.” 

New Zealand’s Parliament was dissolved last Thursday as the country prepares to vote on November 7.