British Gas Business has already paid £1.3m to affected business customers, and is now set to pay £3.4m into an energy efficiency fund plus a further £800,000 penalty.
From 2007-2012 roughly 5.6 per cent of the objections made by British Gas Business to non-domestic customers wanting to change energy suppliers were found to be invalid.
Ofgem said the ability for consumers to switch suppliers was crucial to a well-functioning market. The company cooperated fully throughout the inquiry, which began in 2012.
The company apologised for the errors and said it was working swiftly to change its computer systems and processes.
"We take any failure to meet our obligations very seriously and will ensure that the new energy efficiency fund we have set up will be a real help to hundreds of small businesses," said Stephen Beynon, managing director of British Gas Business.