TalkTalk pays £2.5m in overcharge compensation

Thousands of TalkTalk and Tiscali customers have received almost £2.5m in refunds and goodwill payments after Ofcom cracked down on charges for services that were supposed to have been cancelled.

On Monday, the regulator said the companies — which have been one since Carphone Warehouse bought Tiscali in 2009 — have identified and compensated around 62,000 customers who had been affected by the overcharging, as Ofcom told them to.

Ofcom censured TalkTalk and Tiscali over the issue in November, while threatening a financial penalty. However, the regulator said on Monday, the companies took action to comply with the rules quickly enough to avoid that penalty being imposed.

"The government is currently consulting on changes to the law," Ofcom said. " Under these changes, Ofcom would be able to issue a financial penalty for breaches of the regulations, regardless of whether a company subsequently took action to address the problem. If the government decides to proceed with these changes, these new powers would be available to Ofcom on 25 May 2011."

Ofcom's investigation of TalkTalk and Tiscali followed the receipt of complaints from more than a thousand consumers who had been affected. However, the regulator said on Monday that it is still receiving similar complaints, so the investigation is continuing.

"If the investigation reveals that TalkTalk or Tiscali UK have continued to breach the regulations, they could still face further enforcement action including a financial penalty," Ofcom said.