Spark Energy is to pay £250,000 to Citizens Advice after an Ofgem investigation found it breached switching rules and complaints handling regulations.
The regulator found that between June 2010 and October 2013 Spark wrongly blocked customers from switching to other suppliers and also transferred customers to other suppliers without their express consent to stop them building up more debt.
It also failed to bill customers correctly and return refunds promptly, and also fell short of complaints handling standards. (Join our free, Cheap Energy Club to see if you can save by switching.)
Ofgem says Spark has since made "significant progress and has put in place new processes to resolve its issues", but as a result of the "seriousness of the breaches" it will pay £250,000 to Citizens Advice to provide help to energy customers.
This money will be split equally between Citizens Advice Scotland and Citizens Advice in England and Wales .
Ofgem first opened an investigation into Spark in June 2013 following concerns about the high number of complaints it had received about the energy firm from several sources.
This included a call from the now defunct campaigning group Consumer Futures (formerly known as Consumer Focus) to investigate Spark in May 2013 (see the Consumer Futures calls for Spark Energy probe MSE News story).
Sarah Harrison, senior partner in charge of enforcement at Ofgem, says: "The fact that Spark's problems occurred when it was establishing itself in the market is no excuse for not complying with its obligations. Following our intervention, Spark has made significant progress and has put in place new processes to resolve its issues.
"The £250,000 reflects the seriousness of the breaches but also Spark's size, and that during the investigation it has worked hard to resolve the issues identified."
'We've learned valuable lessons'
A spokesman for Spark Energy says: "We welcome the manner in which Ofgem has dealt with these issues. We've learned valuable lessons from this process and recognise there were things we should have done differently, and we apologise for these failings.
"However we're pleased Ofgem has recognised the progress we've made over the past 21 months to transform our levels of customer service in this complex and difficult market.
"There has been a wholesale restructuring of the business and an overhaul of key personnel, including the appointment of a new CEO, a new director of compliance, a new head of legal and a new head of customer service.
"We've also invested £2.5m to double our customer care team from 60 to 120, overhaul training and introduce state-of-the-art IT systems.
"In the final quarter of 2014, more than nine out of 10 customer complaints were handled within 24 hours, a massive improvement on the second quarter of 2013 figure of under 30%, showing the progress that Ofgem has recorded."