TalkTalk and Tiscali fined £3m over billing errors

TalkTalk CEO calls the fine a "disproportionate penalty..."

Ofcom has fined TalkTalk and Tiscali UK £3m after the companies incorrectly billed tens of thousands of consumers for services they had not received.

The telecoms regulator opened an investigation into the companies in July 2010 following complaints from over 1,000 customers.

Ofcom found that both companies had wrongly issued bills to consumers for services they had not received, in particular to consumers who had closed their accounts.

Ofcom has fined TalkTalk £3m for incorrectly billing tens of thousands of consumersPhoto: Mark Hillary

This occured in over 62,000 cases between 1 January and 1 November 2010, and as a result both companies were issued with a legally binding notification in November 2010, which set them a deadline of 2 December 2010 to take steps to sort out their billing problems.

But Ofcom said that while TalkTalk and Tiscali UK did take some "important steps" to comply with the rules - such as making changes to their customer record management systems - they still incorrectly billed almost 3,000 consumers between 2 December 2010 and 4 March 2011.

Ofcom said it issued TalkTalk and Tiscali UK with the fine "to reflect the seriousness of their breach of the rules and to act as a deterrent to them and other telecoms companies who must comply with the rules".

The companies are also required to pay refunds to all affected customers by Ofcom. To date, the pair have paid over £2.5m in refunds and good-will payments to over 65,000 affected consumers.

Tiscali UK, however, is no longer a company in itself. Carphone Warehouse bought Tiscali UK in 2009, merging it into its TalkTalk ISP subsidiary. It subsequently spun off the combined business in 2010.

TalkTalk Group CEO Dido Harding said in a statement the £3m fine is a "disproportionate penalty" and the "issues" surrounding the integration of the Tiscali business in 2010 are now behind it.

"The billing migration was completed last year and in the last three months Ofcom has received only 12 complaints on the issue," Harding said.

The CEO added: "Last year I recognised that we needed to invest in our systems, processes and customer services and we are making significant progress. We have seen a 40 per cent year-on-year reduction in customer service calls. Ofcom receives three times fewer calls about TalkTalk than they did at the height of the Tiscali integration."