Worcester-based energy giant Npower is to be fined £1.8 million after it failed to take sufficient action to prevent mis-selling of contracts to customers.
Energy regulator Ofgem announced the fine after finding that npower breached conditions of its supply licence by failing to take adequate steps following complaints from customers about visits by the company's doorstep salespeople.
Although Npower had procedures in place to follow up complaints, company managers had not done enough to apply and improve them, allowing incidents of mis-selling to proceed unchecked, Ofgem ruled.
As a result, Ofgem concluded that npower, which has its head office in Warndon, had failed in its duty to ensure that it had taken all reasonable steps to fix the matter.
Ofgem's managing director of corporate affairs, Sarah Harrison, said: "This decision sends a clear message to energy suppliers that failing customers and falling short of the licence standards will lead to Ofgem action, as well as associated reputational damage.
"Mis-selling undermines consumer confidence, but getting it right on the doorstep can help customers make effective choices in the energy market. This is why Ofgem's energy supply market probe committed to strengthening the doorstep selling rules."
The regulator said the penalty "could have been much higher", but reflected the nature of the licence breach and the prompt action taken by Npower.
Npower said in a statement: "We were very disappointed and concerned when we found out that back in April some sales staff were deliberately flouting our procedures. We set high standards and there is no place for this behaviour in our company so we immediately dismissed those who were acting fraudulently.
"We have improved our processes and introduced sales validation on the doorstep. The customer is put directly in touch with a dedicated call centre to make sure they are completely happy with all aspects of the sale. No commission is paid unless the sale is validated."
