EDF Energy has agreed to pay a package worth £4.5 million to help vulnerable customers after an Ofgem investigation found it had breached its marketing licence conditions.
It's the biggest payment of its kind and will see the energy firm pay out £50 into the accounts of 70,000 of its "most vulnerable customers", says the firm.
It will also pay £1 million into a fund run by the Citizens Advice Bureau to raise awareness among customers on how to get the best energy tariff.
The payouts come after the regulator Ofgem found EDF had breached some aspects of its licences governing the information its sales department gives to customers.
Telesales agents were found to sometimes make opening statements in their calls to customers that claimed EDF could offer them savings before they knew the actual circumstances of the customer.
Ofgem also found that customers were not always given complete information on matters including contract terms and the way their direct debits or annual consumption was calculated.
The regulator is continuing to investigate EDF's competitors Scottish Power, Scottish and Southern Energy, and nPower.
"EDF Energy has done the right thing by stepping forward and recognising there were weaknesses in its sales processes," says Ofgem spokesperson Sarah Harrison.
"The firm also took the initiative to correct these problems during Ofgem's investigation. This is an important step forward and demonstrates a commitment by EDF Energy towards re-establishing consumer trust, which we welcome."
The announcement is being praised by consumer groups.
"Today's announcement marks a real turnaround in thinking in the energy industry. Both EDF Energy and Ofgem are to be applauded for taking such a grown up, constructive and responsible approach," says Ann Robinson, spokesperson at uSwitch.com.
"Instead of simply slapping down a fine, both have worked together to tackle the issue and to then agree a penalty that will actually help consumers. As a result, £4.5 million will be going towards helping vulnerable customers, which satisfies the need for a penalty, but also does some good."