Optus to refund 175,000 customers

Optus has been forced to refund $2.4 million to mobile insurance customers for failing to disclose key features and limitations of the product.

Corporate watchdog the Australian Securities and Investment Commission (ASIC) ordered the telco to refund 175,000 customers.

Customers who have been overcharged will be compensated by direct credit to their account, including interest.

Optus will write to 500,000 customers who may have been affected, and donate the amounts owing to former customers who can't be contacted to a charity.

The breach affected customers who bought mobile insurance from Optus since 2008. ASIC said the company failed to provide a product disclosure statement and financial services guide.

Other breaches include not offering customers one month free insurance as advertised, incorrectly charging a premium during a 'rain-check' period', not providing the correct information in regards to excess and cooling-off rights, and providing the wrong insurance cover.

ASIC said it was concerned that the company had inadequate compliance systems and processes due to training, monitoring and supervision.

In response, Optus has appointed an independent external director to review its compliance functions.

An Optus spokeswoman told CRN that customers could call the telco on 1800 854 349 if they believe they have been affected.

"Last year, Optus advised the Australian Securities and Investments Commission (ASIC) in accordance with its AFSL licence obligations of several errors in the way it sold insurance," said the spokeswoman.

"Optus has taken a number of steps to prevent future mistakes including providing stores with sufficient copies of the product disclosure statement and additional training for employees who deal with or sell insurance products."