TalkTalk's billing policy broke rules, says Ofcom

The communications watchdog has officially warned the broadband and telecoms giant TalkTalk that it faces a fine if it continues to breach industry rules by billing customers for services they have cancelled.

Ofcom said it had issued a legally binding notification to the company over its TalkTalk and Tiscali UK arms, requiring it to comply with regulations within a month or face enforcement action. A financial penalty could be as high as 10 per cent of relevant turnover.

TalkTalk, which bought Tiscali UK last year, blamed its technology systems, adding: "We apologise for the inconvenience".

Ofcom's director of consumer affairs, Claudio Pollack, said the investigation it launched into the company in July had uncovered the practice. "This is unacceptable, which is why we have ordered them to clean up their act or face the consequences," he added. The regulator said it had received more than 1,000 complaints from customers in the past year. One woman said she had continued to receive bills from the telecoms company despite switching to a rival provider. Another received a bill from debt collectors for a service that she cancelled from Tiscali UK in 2006 and was charged £609.97 for services that were not provided.

The notification obliges the company to refund all customers who were billed for cancelled services from 1 January. Ofcom also told TalkTalk to cease debt collection or legal action against its customers and to pay their legal costs.