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Ofcom has handed Royal Mail the third largest fine it has ever imposed and has told the postal operator it must urgently publish – and more importantly deliver – a “credible improvement plan”.
It’s the third year running that Royal Mail has been fined for missing its delivery targets.
Ofcom said the fine this year would have been a whopping £30m, but this was reduced by 30% to £21m after Royal Mail admitted liability and agreed to settle the case.
It is, however, still double the amount of last year’s £10.5m fine.
Even after accounting for exceptional weather events – Storm Darragh in December 2024 and Storm Eowyn in January this year – Royal Mail only delivered 77% of First Class mail on time, while 92.5% of Second Class mail arrived on time between April 2024 and March 2025.
The targets during the period were that Royal Mail should deliver 93% of First Class mail within one working day of collection; and deliver 98.5% of Second Class mail within three working days of collection.
Ofcom stated: “In deciding on the level of this fine, we have considered the harm suffered by customers as a result of Royal Mail’s poor service, and the fact that it has breached its obligations in three consecutive years.
“Ofcom also has a duty to ensure the universal postal service is financially sustainable, so we have also considered Royal Mail’s overall financial position, including its profitability and cash flow.”
The period under review pre-dates EP Group’s takeover of Royal Mail parent International Distribution Services, and the business subsequently being delisted from the Stock Exchange.
It also pre-dates the new and revised Universal Service model agreed in July, which is currently being implemented although the roll-out has been paused until the end of the year.
Ofcom stated: “As well as fining the company, we have been pressing Royal Mail regularly on what it is doing to turn things around.”
Royal Mail produced an improvement plan for 2024/25, aiming to achieve 85% for First Class mail and 97% for Second Class mail by March of this year.
“This would have amounted to significant improvement. However, this has not materialised,” the regulator noted.
“This is unacceptable, and we have told Royal Mail it must urgently publish and implement a credible plan that delivers significant and continuous improvement.
“Without this, we are likely to continue to see financial penalties as both necessary and appropriate.
Ofcom said the new USO agreement should put the postal service on a more sustainable footing, and enable Royal Mail to invest more in improving its delivery performance.
“Royal Mail must now play its part by implementing this effectively and improving its reliability.”
Royal Mail responds
A Royal Mail spokesperson said: “We acknowledge the decision made by Ofcom today and we will continue to work hard to deliver further sustained improvements to our quality of service.
“A key area of focus and investment has been the detailed work ahead of full implementation of our new delivery model, enabled by Ofcom’s changes to the Universal Service. This is critical to enable us to drive a step change in quality of service.
“We have also implemented important changes across our network including recruiting, retaining and training our people, and providing additional support to delivery offices.”
“Where we have piloted Universal Service changes, we can see that our model is working, with improvements in deliveries. This will help us deliver a modern, reliable and more financially sustainable postal service that meets the needs of today’s postal users.”
In September Royal Mail said quality of service was a “top priority” and that its service levels were continuing to improve.
The new USO agreement has effectively relaxed Royal Mail’s delivery targets, with First Class mail changing from 93% to 90% to be delivered next day; and for Second Class mail from 98.5% to 95% delivered within three days.
However, it also includes new “tail of mail” targets aimed at stopping some post languishing in the Royal Mail system and arriving weeks late.
The tail of mail targets means that 99% of First Class mail should be delivered D+3 (within three working days) and for Second Class 99% should be D+5 (within five working days).
The £21m fine will be passed on in full to HM Treasury.
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