UK ISPs TalkTalk and Tiscali have been forced to refund £2.5m to 62,000 customers that had been billed for services they'd previously cancelled.

Last year, Ofcom revealed it had received over 1,000 complaints from Brits that have been billed by the two ISPs for services they haven't received. The practice breeches telecoms rules and the regulator threatened to fine TalkTalk, which owns Tiscali, unless the issue was resolved.

"Under the law as it currently stands, Ofcom must allow a company a period of time to come into compliance with the regulations by a set deadline. If the company takes action to comply with the rules by the deadline, Ofcom cannot impose a financial penalty," the regulator said.

"TalkTalk and Tiscali UK have taken significant steps to fix the problem and to comply with the regulations by the deadline set, in direct response to Ofcom's action."

Ofcom added that on this basis, the regulator is not in a position at present "to impose a financial penalty on the companies under our current legal powers".

The regulator revealed it's working with the government on changing the existing law, so Ofcom can impose fines even if the issue is resolved.

Ofcom also revealed it will "continue its investigation into their compliance with the regulations".

"If the investigation reveals that TalkTalk or Tiscali UK have continued to breach the regulations, they could still face further enforcement action including a financial penalty."

See also: TalkTalk unveils fibre broadband package