Ofgem said that E.ON failed to properly train and monitor its staff and those it employed through third party telesales agencies, leading to incorrect information being provided to customers on the doorstep and over the phone.
As part of the redress package, E.ON will pay around £35 to 333,000 of their customers who are normally recipients of the Warm Home Discount. It will also make automatic payments to some vulnerable customers who may have been affected by the poor sales practices.
The company has set up a dedicated hotline and will write to around 465,000 customers it has identified through its redress work in order to see if they are entitled to compensation.
E.ON chief executive Tony Cocker said as part of overhauling its sales operations the company has ended face-to-face sales and outbound residential telephone cold calling.
He added: “It is completely unacceptable that we may have been unclear with customers about their tariff choices and as a result those customers may not have made the best choices for them.
“There was no organised attempt to mislead, and Ofgem has acknowledged this, but that does not excuse the fact we did not have in place enough rules, checks and oversight.”
Since 2010, Ofgem has imposed £100m in fines and redress on energy companies for various rule breaches, including £39m for mis-selling.
Among other energy companies, npower said in December it would pay £3.5m in redress to customers after it was found to have breached rules.