Energy company npower is to pay £3.5m to vulnerable customers after it was found to have breached energy sales rules.
Regulator Ofgem said the failings of doorstep and telesales staff meant customers were not able to make informed decisions on whether to switch suppliers.
The company remedied the shortcomings by September 2012 but has agreed to make a payment of at least £25 to each of its Warm Home Discount customers.
Ofgem said npower gained insufficient information about a customer’s consumption to enable them to decide whether to switch. It also failed to ensure that comparisons between the price of npower’s supply and that of the customer’s current supplier were always based on the tariff that customers were on.
And information on when some consumers would receive their direct debit discount and how direct debit levels would be reviewed was also found to have been inaccurate.
Npower will write to customers affected by the breaches before assessing whether they are entitled to compensation.
Ofgem’s investigation started in August 2010 and relates to activities that took place between October 2009 and July 2012.
Earlier this month, npower wrote to customers apologising for what was described by Ofgem as a “serious deterioration” in customer service levels.
The German-owned energy giant admitted that a number of bills and statements had failed to go out on time, while some direct debit payments were not set up properly.
Npower said it would donate £1m to a fund for vulnerable customers, with half of this channelled to Macmillan Cancer Support.
The company, which has 3.4 million domestic customers, this week published a list of the actions it is taking to improve service.
The probe into npower comes as part of a wider market inquiry into mis-selling in which has already seen four investigations concluded.
SSE was fined £10.5 million in April for its “prolonged and extensive” sales practice failures and in October, Scottish Power offered to pay back £8.5 million to customers.