Media playback is unsupported on your device Media caption Sarah Harrison from Ofgem says two fifths of customers were dissatisfied with the way complaints were handled

British Gas has been fined £2.5m by the regulator Ofgem for the way in which it deals with customer complaints.

Ofgem ruled that the company had failed to reopen complaints when customers said they had not been resolved.

It added that British Gas had not provided customers with key details about help they could get from the energy ombudsman.

However, the energy company described the ruling as "totally disproportionate" to the issue.

'Basic failures'

Ofgem also said the energy provider had failed to put in place proper complaint procedures for small business.

"Today's finding highlights basic failures in British Gas' customer service, particularly in dealing with some of its small business customers," said Sarah Harrison at Ofgem.

"We warned the industry in March that we would be backing up our plans to reform the retail market with a tough approach to enforcement."

For our micro-business customers, we acknowledge our service fell short of what they should expect from British Gas, for which we apologise British Gas spokesman

But British Gas said the breach was minor when it had 16 million accounts, and its complaints handling procedures had recently been praised by watchdog Consumer Focus.

"However, specifically for our micro-business customers, we acknowledge our service fell short of what they should expect from British Gas, for which we apologise," a spokesman said.

"We knew we had an issue here, which is why we flagged it to Ofgem. After a £4m investment, we are now confident we meet all of our regulatory requirements."

Further inquiries

Ofgem said it was also investigating Npower and EDF Energy over the way they handle customer complaints.

Ms Harrison said regulations over dealing with customer complaints had been in place for three years and, although the position was improving, Ofgem wanted to retain focus on the issue.

Scottish Power, Scottish and Southern Energy, EDF Energy and Npower are all being investigated by the regulator for mis-selling.

Ofgem added it was looking into potentially misleading marketing at Scottish Power, and the difference between the company's standard credit and direct debit tariffs.

Audrey Gallacher, of watchdog Consumer Focus, said that customers were concerned about rising prices, and that should also be on the regulator's agenda.

"Major questions are still hanging over whether pricing is fair, whether companies mis-sell energy on the doorstep and many others. Ofgem has a big job on its hands, but this is a good sign that it is prepared to step up," she said.

This is the second time in a month that British Gas has been fined by Ofgem.

At the start of July it was fined £1m for misreporting how much electricity it supplied. This affected its target under the government's programme for supplying electricity from renewable sources.

The error was made over seven years by British Gas Business, which supplies the company's business customers.