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Sunday, June 16, 2024

Failure to deliver: £5.6M fine for Royal Mail

Ofcom has fined Royal Mail £5.6 million today for its failure to meet delivery targets in the 2022/23 financial year.

Annual requirements stipulate that Royal Mail must achieve:

  • 93% on-time delivery rate for first class mail within one working day
  • 98.5% on-time delivery rate for second class mail within three working days
  • Complete 99.9% of delivery routes each day.

In the reported performance results for 2022/23, Royal Mail fell short, delivering only 73.7% of first class mail on time and 90.7% of second class mail on time.

The completion rate for daily delivery routes stood at 89.4%, failing to meet the specified targets even after adjustments for industrial action, extreme weather, and the Stansted runway closure.

“Exceptional circumstances” considered

Despite the consideration of exceptional circumstances, including industrial action and weather-related challenges, Royal Mail’s adjusted performance for first and second class mail remained at only 82% and 95.5%, respectively.

This significant and unexplained deviation from targets resulted in substantial harm to customers, with Royal Mail found to have inadequately addressed the issue.

Consequently, Ofcom has levied a fine of £5,600,000 on Royal Mail, reflecting a 30% reduction due to the company’s admission of liability and agreement to settle the case.

The financial penalty must be paid to HM Treasury within two months.

Ofcom’s director of enforcement, Ian Strawhorne, emphasised the gravity of Royal Mail’s responsibility in people’s lives and the need for reliability and consistency.

Despite acknowledging the pandemic’s impact on previous operations, Ofcom warned that Royal Mail could no longer use it as an excuse and stressed the importance of improved service levels.

During the investigation, Ofcom also examined concerns about the prioritisation of parcels and letters for delivery.

Contingency plans

While there was no evidence of senior management directing prioritisation outside recognised contingency plans, there were worries about insufficient control and oversight at certain delivery offices.

High absence and vacancies led to on-the-day decisions by customer operations managers, impacting service levels.

Ofcom called for Royal Mail to ensure proper training for customer operations managers, closely monitoring the company’s performance and efforts to return delivery offices to pre-Covid practices amid ongoing challenges.

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