British Gas has been slammed with a £2.5 million fine by the regulator Ofgem for failures in its complaint-handling procedures.
The energy provider failed to reopen complaints that customers felt had not been properly resolved on several occasions and didn't provide enough information to customers about the complaints process.
Ofgem said British Gas was also guilty of not giving enough information to customers about help available from the energy ombudsman and did not put in place adequate processes for dealing with complaints from small businesses.
The regulator said this fine was a warning to other energy companies to make sure they treat their customers fairly.
British Gas said it would pay for the fine out of its profits and customers "would not bear the cost".
A spokesperson said the fine was "totally disproportionate to the issue" but did admit the company had lapsed in customer service with regards to small business customers.
"We acknowledge our service fell short of what they should expect from British Gas, for which we apologise. We knew we had an issue here, which is why we flagged it to Ofgem. After a £4 million investment, we are now confident we meet all of our regulatory requirements."
The investigation by Ofgem into the energy provider's practices began in June 2010 and since then the regulator says it has taken actions to improve its complaint handling.
Sarah Harrison, spokesperson for Ofgem, says: "Today's finding highlights basic failures in British Gas' customer service.
"We warned the industry in March we would be backing up our pans to reform the retail market with a tough approach to enforcement. This £2.5 million fine against British Gas, and the other £10 million of fines imposed on the energy industry so far this year, sends a clear message to energy companies they must abide by the rules," she adds.
Audrey Gallacher, spokesperson at Consumer Focus, says frustrating the attempts of customers to get complaints sorted out is unacceptable.
"The importance a company gives to solving customer complaints is a good indication of how much they value their customers. British Gas deserves some credit for being open about its failures and taking action to put them right. But the experience of its customers when they make a complaint in the future will be the real test.
"This fine must be part of a significant overhaul of the energy market. Most of the big six energy companies are under investigation for one form of poor practice and consumer organisations need to be vigilant if people are to get a fair deal," she adds.