Optus will refund $2.4 million to 175,000 customers who were overcharged for insurance products, the Australian Securities and Investments Commission (ASIC) says.

The telco will also contact about 500,000 customers who may be entitled to compensation.

ASIC acted after Optus reported failing to provide product disclosure statements and financial services guides to some customers who bought mobile phone insurance in store or by phone.

“As a result, many customers may not have been aware of certain key features and limitations of the insurance they purchased,” the regulator says.

Optus uncovered four more breaches in response to ASIC’s enquiries: customers not receiving a month’s free insurance under a promotional offer; people being incorrectly charged a premium during a “rain-check” period; customers not being given the required information before purchasing a policy over the phone; and people being issued the wrong cover.

The company has appointed an independent company to review its compliance with Australian financial services licence obligations.

Optus, owned by Singapore Telecommunications, is the second-largest mobile service operator in Australia, with about 9.3 million customers and 30% market share.