CGU and Accident and Health International (AHI), a wholly owned entity of CGU, have agreed to refund customers more than $2 million in payday loan consumer credit insurance (CCI) premiums and fees, ASIC has confirmed.

The agreement follows court action undertaken by ASIC against The Cash Store that found the company “had acted unconscionably in selling a payday loan CCI product,” the regulator said in a statement.

ASIC Deputy Chair Peter Kell said that the investigation into The Cash Store is ongoing and noted the agreement reach with CGU and AHI.

“ASIC took action because we were concerned about the unfair sale of the payday insurance when it was highly unlikely that consumers would be able to make a claim.

“We therefore welcome CGU and AHI's agreement to refund more than $2 million to these consumers.”

CGU, which upped its stake in AHI last week, have agreed to refund total amounts paid by customers, with interest, as well as review claims that were denied during the investigation period from August 2010 to March 2012.

“CGU and AHI share ASIC’s concerns about the actions of The Cash Store and the unconscionable way it sold an insurance product we had provided,” Richard Webb, a spokesman for CGU said.

“We are particularly concerned about the impact of The Cash Stores actions on its customers.”

CGU also agreed to appoint independent external firms to review its supervision of third parties as well as a review of AHI, which was responsible for underwriting the payday product.

“CGU and AHI take our responsibility very seriously and we want to do the right thing, which means delivering a fair and speedy resolution to The Cash Stores customers,” Webb continued.

“We will be refunding The Cash Stores customers who were sold this pay day loan insurance product all fees and premiums collected plus interest.”

The ongoing ASIC investigation into the sale of CCI by The Cash Store saw another major insurer refund customers over $1 million earlier this year.