Optus will refund 175,000 mobile phone insurance customers a combined $2.4 million after the corporate regulator found it had overcharged them, handed out the wrong products, and failed to provide certain disclosure information.

The Australian Securities and Investments Commission today revealed Optus had self-reported a systemic breach regarding its failure to hand out a product disclosure statement and financial services guide to a number of its mobile phone insurance customers.

ASIC said its subsequent enquiries prompted Optus to report four more breaches involving the disclosure of information as well as overcharging and issuing the wrong insurance products.

Some customers weren't given a promised one month's worth of free insurance, others were incorrectly lumped with a premium during a supposed rain-check period, some weren't informed of their excess and cooling off rights, and a number were given more expensive and less desirable cover than what they asked for, the regulator said.

"ASIC was concerned that these breaches indicated that Optus had inadequate compliance systems and processes, such as training, monitoring and supervision of staff," it said in a statement.

Optus will now write to all 500,000 customers who could be affected.

"Where overcharging has occurred, Optus will take steps to contact past customers and will compensate current customers by a direct credit to the customer's account. Compensation will include interest," ASIC said.

"Optus is also proposing to pay amounts owing to former customers who cannot be located to a charity assisting with financial literacy."

The telco has appointed an external auditor to undertake a "comprehensive review" of its compliance functions, ASIC said.

"It is important that when a business is licensed by ASIC to sell financial products to retail consumers, it ensures that it does so consistently with the representations it has made to consumers, and in compliance with the financial services laws," ASIC deputy chairman Peter Kell said in a statement.

"Where consumers have suffered a detriment, it is important that remediation is undertaken, and that steps are taken to ensure that the business is operating in compliance with the relevant legal obligations."

Optus said it had taken a "number of steps" to prevent future mistakes, including extra training for insurance sales staff.

Mobile phone insurance customers can call the telco on 1800 854 349 to ascertain whether they are affected.