Ofcom has fined Vodafone a record £4.6m for failures in its handling of customer complaints and for overcharging more than 10,000 pay-as-you-go mobile customers.
Over the 17-month period to April 2015, 10,452 of Vodafone's pay-as-you-go customers lost a total £150,000 pounds as a result of thir top-ups not being recognised by the firm's payment systems.
Ofcom found that Vodafone, the world's second largest mobile operator, had failed to identify or address the problems and only acted after the regulator intervened. In addition, the company's customer service agents were not given proper guidance as to what constituted a complaint, the regulator said.
"Vodafone's failings were serious and unacceptable, and these fines send a clear warning to all telecoms companies," said Ofcom consumer group director Lindsey Fussell.
"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 said it regretted the failures and that it has refunded the vast majority of the affected customers, with all but 30 having been fully reimbursed or re-credited an average amount of £14.35. It has also donated £100,000 pounds to charity.
"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," it said in a statement.
"It is clear from Ofcom's findings that we did not do that often enough or well enough on a number of occasions. We offer our profound apologies to anyone affected by these errors."
Vodafone is the UK's most complained about mobile provider. In March Ofcom said Vodafone was the only provider to have more complaints than the industry average of 10 per 100,000 customers.
The company has been beset by problems over the last few months including a botched migration of customer data into a new customer relationship management (CRM) system which saw sales fall 10 per cent and which may have been behind the pay-as-you-go failings.
"The matters under investigation were a consequence of errors during a complex IT migration which involved moving more than 28.5 million customer accounts and almost one billion individual customer data fields from seven legacy billing and services platforms to one, state-of-the-art system," the company says on its website.
Last November Vodafone was hit by a hacking incident where the accounts of almost 2,000 customers we accessed.
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