Industry regulator Ofcom has announced it is fining Royal Mail £10.5m (US$13.2m) for failing to meet its First- and Second-Class delivery targets in the 2023/24 financial year.
Ofcom’s rules require Royal Mail to deliver, in each financial year, 93% of First Class mail within one working day of collection and 98.5% of Second Class mail within three working days of collection.
In its investigation, Ofcom found that from April 2023 to March 2024, Royal Mail only delivered 74.7% of First-Class mail on time and 92.7% of Second-Class mail on time. The company attributed its performance to its challenging financial position and delays to the ballot on a deal that followed the previous year’s industrial action.
However, Ofcom stated that it does not consider either of these to be justifiable reasons for Royal Mail’s failure to provide the levels of service expected of it.
“Ultimately, it is for the company to manage its financial position taking account of its obligations. We have therefore decided that the company breached its obligations by failing to provide an acceptable level of service without justification. Royal Mail took insufficient and ineffective steps to try and prevent this failure, which is likely to have impacted millions of customers who did not get the service they paid for,” the regulator stated in a press release today (December 13).
Action to improve performance
As well as fining the company, Ofcom said it is pressing Royal Mail regularly on what it is doing to turn things around. It stated, “At a minimum we expect to see a clear, credible and publicly communicated plan setting out how Royal Mail will get back on track through meaningful, sustainable and continuous improvements for customers.”
Ian Strawhorne, Ofcom director of enforcement, added, “With millions of letters arriving late, far too many people aren’t getting what they pay for when they buy a stamp. Royal Mail’s poor service is now eroding public trust in one of the UK’s oldest institutions.
“This is the second time we’ve fined the company since the pandemic. Royal Mail has provided an improvement plan, and we’re seeing some signs of progress, but it must go further and faster to deliver the service that people expect.”
Royal Mail response
In a statement on its website. Royal Mail said, “We acknowledge the decision made today by Ofcom. Throughout this year we have continued to implement substantial changes to drive improvements. This is shown in our latest quality of service results with both First- and Second-Class mail improving year-on-year. Ofcom also note that we are ‘on a recovery path to significantly improve performance’.
“Delivering great quality of service is extremely important to us and we are making the necessary changes to deliver for our customers. However, it is essential that these efforts are backed by urgent reform of the Universal Service, restoring it to a level that meets the needs of today’s postal users, not the needs of customers 20 years ago. Combined this will help create a modern, sustainable and reliable service for future generations.
“In April, we submitted our proposed reforms on the Universal Service. This proposal is designed to protect what matters most to customers. We look forward to Ofcom’s upcoming consultation in January which will enable the required regulatory changes to be made by summer.”
A non-confidential version of Ofcom’s full decision will be published in due course.