UK ISP TalkTalk has been fined £3m by Ofcom for incorrectly billing thousands of customers.

The regulatory body began an investigation into TalkTalk and Tiscali, which the ISP owns, in July last year after it received more than a thousand complaints from customers that had been billed for services they hadn't received or when they had already closed their accounts. The complaints relate to incidents between January and November 2010 and means the ISP has breached telecoms rules.

TalkTalk was given a deadline of December 2010 to take steps to sort out their billing problems but Ofcom said that while TalkTalk and Tiscali did take some important steps to comply with the rules they still incorrectly billed almost 3,000 consumers from December 2010 to March 2011.

As a result, the regulator has issued the £3m penalty "to reflect the seriousness of their breach of the rules and to act as a deterrent to them and other telecoms companies who must comply with the rules".

"Ofcom considers this to be a serious breach of the rules. However, Ofcom is issuing TalkTalk and Tiscali UK with a lower penalty than they might otherwise have been given, had they not taken steps towards complying with the rules, and taken action to remedy the harm they caused to consumers," the regulator said.

In February, TalkTalk was forced to refund £2.5m to 62,000 customers they'd billed for services they'd previously cancelled. At the time, Ofcom said it was not in a position "to impose a financial penalty on the companies under our current legal powers".