Ofcom fines Royal Mail £10.5m for missing delivery targets

Regulator Ofcom has fined Royal Mail £10.5 million for missing its post delivery targets in the 2023-2024 financial year.

The fine is the second in two years, after the watchdog also gave Royal Mail a £5.6 million penalty in November 2023.

Royal Mail said just under three-quarters of first class post was delivered on time during the period, well short of its 93% target.

And 92.7% of second class post was delivered on time, below its 98.5% target, it said.

Eroding trust

Ian Strawhorne, Ofcom director of enforcement, said: “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.”

Changes

A Royal Mail spokesperson said high quality service is “extremely important to us” and that it is making changes to deliver it.

But they added that its one-price-goes-anywhere so-called universal service obligation needs “urgent reform”, as it does not meet modern customers’ needs.

The universal service currently requires Royal Mail to deliver letters six days a week and parcels five days a week, but is under review.

The fine comes as Czech billionaire Daniel Kretinsky closes in on a deal to buy Royal Mail from current owner International Distribution Services.

Pledges

Daniel Kretinsky’s EP Group agreed to buy IDS earlier this year, but is believed to have agreed to several concessions to gain approval.

He had already guaranteed to maintain the universal service.

Mr Kretinsky has also pledged not to raid the group’s pension surplus, and keep the brand name and Royal Mail’s UK tax residency and headquarters.

There was also an agreement to respect union demand for no compulsory redundancies until 2025.

It is thought some of these safeguards, such as the commitment to avoid compulsory redundancies, could be extended as part of a new agreement.

The deal would still need security approval after its deal is agreed with the Government.