ENERGY giant SSE is preparing to make payouts to tens of thousands of customers after it was fined a record £10.5 million for mis-selling packages through telephone sales, in stores and on doorsteps.

An SSE spokeswoman for the company said it had already settled 4000 claims and had been approached by 6000 people who claim they were caught up in the scandal.

SSE, one of Britain's "big six" energy suppliers, formerly traded as Scottish & Southern Energy. It estimates it will eventually have to compensate up to 25,000 customers who lost money when they were persuaded to switch to tariffs which turned out to be higher than their original deals.

The firm has set up a dedicated phone line for people concerned they were mis-sold a package, and has apologised for providing misleading and unsubstantiated statements to potential customers about prices and savings.

The spokeswoman said: "We expect there are around 25,000 who are affected and have written to almost one million customers explaining what we are doing. We will look at the details of when they were contacted and what the deals were and make good on any losses they have incurred."

Energy watchdog Ofgem issued the fine after it found "failures at every stage of the sales process" across SSE's selling activities.

SSE has since halted its doorstep-selling activities and has also brought all domestic telesales in-house. A £5m fund has been put aside to cover compensation claims, £400,000 of which has already been paid out.

Ofgem has now finished two of four mis-selling investigations launched in 2010, but inquiries are still ongoing relating to ScottishPower and npower, while it launched an investigation into E.ON's energy sales practices last April.

The scandal has been partly blamed on the number of tariffs and price plans available to customers, and action is being taken to simplify the energy market.

Recommendations by Ofgem, which will come into force this summer, include restricting suppliers to offering no more than four simple core tariffs per fuel type. Suppliers will also have to make electricity and gas deals more transparent through clearer bills.

Trisha McAuley, senior director at Consumer Focus Scotland, said: "We support Ofgem's Retail Market Review proposals. Simplifying energy tariffs by requiring a standard charge and one unit rate, cutting the number of tariffs, and highlighting key information on bills, will help give customers much greater clarity on pricing."

Meanwhile, calls for a police investigation into the mis-selling scandal by Barry Gardiner, an MP who sits on Westminster's energy committee, have been ruled out by Ofgem. Its spokeswoman said it was unable to prove there had been a deliberate attempt by SSE management to deceive customers.