Scottish Power has been fined £8.5 million by energy regulator Ofgem for mis-selling and been ordered to set up a fund to help its most vulnerable customers.
The regulator fined Scottish Power (one of the UK's big six energy firms) after finding its door-to-door and telesales agents were guilty of mis-selling between October 2009 and January 2012.
Ofgem said the energy giant's telephone and door-to-door sales agents did not give accurate estimates to potential customers of what they would pay if they switched to Scottish Power.
It was also found not to have accurately calculated potential customers' annual consumption, leading to them being told unreliable information.
Ofgem also found Scottish Power did not "adequately monitor" sales agents and did not have "appropriate management arrangements" in place, leading to customers being mis-sold.
The regulator said it had not uncovered any evidence of a strategy by Scottish Power to deliberately mis-sell to customers. But Sarah Harrison, senior partner in charge of enforcement at Ofgem, said: "Today's announcement is a clear signal to energy suppliers of the consequences of breaching licence obligations and importance of taking action to put things right for consumers when they go wrong."
Of the £8.5 million, £7.5 million will paid to its most vulnerable customers, under the Warm Home Discount, with over 140,000 customers expected to receive a payment of £50.
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The other £1 million will be used to establish a compensation fund for mis-sold customers, with victims expected to receive between £5 and £30.
Earlier this year energy company SSE was fined £10.5 million for "prolonged" mis-selling across its doorstep, in-store and phone sales teams.
Ofgem said Scottish Power would have faced a bigger fine had it not stopped doorstop sales and put independent checks in place for its telephone agents.
Neil Clitheroe, ScottishPower's CEO of Energy Retail and Generation, said: "We accept Ofgem's findings and we apologise unreservedly to those customers affected. This arose as a result of new regulations, which were introduced in 2009. I am sorry to say that we didn't implement these properly at that time."