TalkTalk and Tiscali have been ordered to refund customers a total of almost £2.5 million for charging them for services that had been cancelled.
The ruling has been passed by Ofcom which opened an investigation into the TalkTalk Group – which includes Tiscali – in June of last year following more than 1,000 complaints.
Having been made aware of the issues in November, the group was set a deadline of 2 December to take steps to comply with existing telecom rules.
These steps included identifying more than 62,000 affected customers and making almost £2.5 million in refunds and goodwill payments.
Despite the action taken, TalkTalk and Tiscali continue to receive complaints.
"In light of these and information obtained from the companies, Ofcom will continue its investigation into their compliance with the regulations," it said.
Affected customer can contact TalkTalk and Tiscali on a dedicated hotline at 0800 5428 073.
Ofcom said that due to current regulation, if a company takes action to comply with rules by a given deadline, it is unable to impose a financial penalty for breaking rules.
"On this basis, Ofcom is not in a position at present to impose a financial penalty on the companies under our current legal powers," said the watchdog.
Companies found to have broken the rules could soon face fines, however, even if they take steps to remedy the problems.
This is because the Government is currently consulting on changes to the law.
Under these changes, Ofcom would have the power to fine firms found to have breached regulation, regardless of whether a company 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," it said.
"Ofcom welcomes the proposed changes to the law."
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