Royal Mail fined £5.6m by UK regulator for missing delivery targets
Royal Mail has been fined £5.6m by the regulator for missing its first- and second-class delivery targets.
Ofcom said Royal Mail missed the targets by a “significant and unexplained margin”, causing “considerable harm” to its customers.
TThe company delivered more than a quarter of first-class post late, with only 74% arriving on time in the 2022-23 financial year, far below its statutory target of 93%.
It also missed its second-class target, delivering 91% on time compared with a target of 98.5%, and its postal workers completed 89% of delivery routes for each required day, a far cry from the 99.9% expectation.
Royal Mail’s parent company, International Distributions Services, is owned by investors and listed on the London Stock Exchange’s FTSE 250 index of mid-sized companies. However, it still has obligations to deliver post on time, a legacy from before it was privatised in 2013.
Royal Mail has struggled in recent years as the volume of letters being delivered has declined markedly. That has been exacerbated by poor relations with its workforce, resulting in a series of strikes during its peak period in November and December last year.
The surge in online shopping, particularly during the coronavirus pandemic lockdowns, has increased parcel volumes, but it also faces stiff competition on that front. Last week it lost a 360-year monopoly on delivering parcels from branches of the Post Office, which has been independent since 2012.
Ian Strawhorne, Ofcom director of enforcement, said: “Clearly, the pandemic had a significant impact on Royal Mail’s operations in previous years. But we warned the company it could no longer use that as an excuse, and it just hasn’t got things back on track since.
“The company’s let consumers down, and today’s fine should act as a wake-up call – it must take its responsibilities more seriously. We’ll continue to hold Royal Mail to account to make sure it improves service levels.”
Royal Mail argued that some disruption was “outside of Royal Mail’s control”, which it said included strikes during a long-running dispute with workers, as well as extreme weather and the closure of Stansted airport’s runway for resurfacing, which reduced the number of flights allowed. However, Ofcom said that first- and second-class punctuality was still only 82% and 95.5%, respectively, when taking those factors into account.
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In a statement, Royal Mail said it was “very disappointed” with its performance. It said: “Last year was uniquely challenging for Royal Mail. Quality of service was materially impacted by the long-running industrial dispute which included 18 days of strike action.”
It said punctuality is “extremely important to us” and that it was taking unspecified actions to improve performance.
Ofcom granted a 30% discount on the fine to the company after it admitted liability. It will have two months to pay the fine to the government’s Treasury.