Ofcom has fined Vodafone a record £4.6m for "serious and unacceptable" failings that led to a breach of consumer protection rules.
The fine is the largest Ofcom has ever issued for a telecoms provider, and follows two investigations into the company, one of which found 10,452 pay-as-you-go customers did not receive phone credit after paying to top up.
Ofcom said this led to the affected customers collectively losing £150,000 over 17 months, with the problem put down to IT issues following the company's move to a new billing system.
Related: iPhone 7
The regulator, which levied a fine of £3,7m as a result of this first investigation, said Vodafone "failed to act quickly enough to identify or address these problems" only taking steps to rectify the issue once Ofcom became involved.
The second investigation found the firm's customer service agents “were not given sufficiently clear guidance on what constituted a complaint, while its processes were insufficient to ensure that all complaints were appropriately escalated or dealt with in a fair, timely manner.”
The operator also failed to inform customers, in writing, of their right to involve an Alternative Dispute Resolution (ADR) scheme in an unresolved complaint after eight weeks, with Ofcom issuing a fine of £925,000 as a result of this second investigation.
Vodafone offered "profound apologies" following the announcement, saying it was "determined to put everything right".
Lindsey Fussell, Ofcom Consumer Group Director, said: “Vodafone’s failings were serious and unacceptable, and these fines send a clear warning to all telecoms companies.
"Phone services are a vital part of people’s lives, and we expect all customers to be treated fairly and in good faith. We will not hesitate to investigate and fine those who break the rules.”
Vodafone's fine includes a 7.5% reduction following the operator's agreement to enter into a formal settlement, which will see all affected customers reimbursed.
The company has recently invested £15m into its customer service training and systems, and has responded to the Ofcom ruling it a statement, saying: "We deeply regret these system and process failures. We are completely focused on serving our customers: everyone who works for us is expected to do their utmost to meet our customers’ needs, day after day, and act quickly and efficiently if something goes wrong."
Richard Neudegg, regulation expert at uSwitch.com said: “A fine of this size shows just how seriously Ofcom is taking failure to deliver correct service and follow the rules on complaints.
“If telecoms companies don’t resolve consumers’ issues internally, customers have a right to contact one of two free-to-use resolution schemes to get things sorted.
“Access to an Ombudsman is of huge importance. It gives people who feel they’ve been let down by a service provider another route to resolution.
“However, the telecoms market’s complaints procedure is more confusing than other regulated sectors. There isn’t one single Ombudsman - there are two that companies may direct customers to. So it’s extremely important that information on how to access these is completely clear.”
Watch The Refresh: The best tech gossip and reviews every week
Let us know if you were affected by Vodafone's problems in the comments.