(Adds Allianz spokesperson's response)
Aug 27 (Reuters) - The Australian unit of Germany's Allianz SE ALVG.DE will refund more than A$8 million ($5.40 million) to customers who were mis-sold consumer credit insurance (CCI), Australia's investment regulator said on Tuesday.
The Australian Securities and Investments Commission (ASIC) said Allianz Australia Insurance Ltd will refund more than 15,000 consumers for a variety of products, including mortgage and loan protection policies.
"Disappointingly, our work on the sale of CCI has highlighted widespread mis-selling and poor product design," ASIC Commissioner Sean Hughes said in a statement.
The enforced refund is the latest in a growing list of penalties and remediation orders slapped on Australia's financial institutions in the wake of a Royal Commission inquiry into the banking sector that uncovered sweeping mispractice.
An Allianz spokesperson confirmed the insurer had agreed to the remediation and would refund the amount to eligible customers.
"We regret that in this instance some of our customers may have ended up with products that have not been entirely suitable and we are... taking the necessary action to make this right," the spokesperson said.
"As such, we have decided to withdraw from the sale of all CCI products by the end of Q3 2019, and have already communicated this decision to our partners," the spokesperson added.
ASIC in its statement said Allianz had incorrectly sold insurance cover to people ineligible to claim for unemployment or disability, and death cover to customers under 21 years of age who were unlikely to need it.
The refund also covers the charging of fees to customers who paid premiums by the month without adequate disclosure.
ASIC last week vowed to file lawsuits against some of the country's biggest financial institutions as it boosts its capacity to probe misconduct in the financial sector. this month, the country's prudential regulator ordered another local unit of Allianz to set aside an additional A$250 million ($169.9 million) due to shortfalls in its risk governance self-assessment. = 1.4806 Australian dollars)
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