Household supplier E.On Next has been told to pay £4m back to its customers following a review that found customer service weaknesses at every company in the sector.

Ofgem ordered the money be shared by 500,000 households in compensation for the firm’s “unacceptable” call services.

It works out at £8 each. An additional £1m is going to the regulator’s voluntary redress fund which supports the most vulnerable households.

Ofgem found that callers to the company had to wait an average 18 minutes on hold, while half of all calls were dropped.

Ofgem said its review of customer service standards and complaints-handling across the sector uncovered failures industry-wide and that it had required all energy suppliers to make improvements.

Moderate weaknesses were uncovered at 11 companies, including British Gas, EDF and ScottishPower.

Minor weaknesses were found at five suppliers – Bulb, Ecotricity, Green Energy, Shell and Octopus.

Extreme examples of failures were customers being left for hours on hold on the phone.

High levels of unanswered calls were also common.

Cathryn Scott, director for enforcement and emerging issues at Ofgem, said: “The very least that a customer should expect of their supplier is for them to pick up the phone to them in a timely way.

“The levels of service that we discovered at E.On Next during the period of review were unacceptable.”

It took place between October and December last year – a time when the energy-led cost of living crisis was gathering pace.

Bills, which have been supported by the taxpayer since the autumn, are set to ease in July when a new energy price cap takes effect.

An E.On Next spokesman responded: “We won’t shy away from the fact that we weren’t at our best, but we’re heartened Ofgem recognises our efforts and our success in improving service levels even before this review began.

“We hit our agreed targets with Ofgem on day one and we’ve stayed there ever since.”