Royal Mail faces £5.6m fine from Ofcom for missing delivery targets

Communications regulator Ofcom has imposed a £5.6 million fine on Royal Mail for significant and unexplained deviations from its first- and second-class delivery targets.

The regulator highlighted that this failure caused considerable harm to customers, The Guardian reported.

In the 2022-23 financial year, Royal Mail delivered only 74% of first-class post on time, well below the 93% target.

Additionally, it fell short of its second-class target by delivering only 91% on time against a target of 98.5%. Additionally, postal workers completed only 89% of delivery routes per required day, compared to the expected 99.9%.

The parent company of Royal Mail, International Distributions Services, is publicly traded and owned by investors, featured on the London Stock Exchange’s FTSE 250 index.

Despite privatisation in 2013, Royal Mail still bears the responsibility of timely delivery of post. The company has encountered challenges with a significant decline in letter volumes and strained relations with its workforce, leading to strikes in the past.

While the surge in online shopping (particularly due to the lockdowns during the pandemic) has boosted parcel volumes, Royal Mail faces tough competition in this sector.

Recently, it lost its 360-year monopoly on delivering parcels from Post Office branches, which gained independence in 2012.

Ian Strawhorne, the Director of Enforcement at Ofcom, said that while the pandemic had a notable impact on Royal Mail's operations in previous years, the company was warned not to use it as a continual excuse.

Unfortunately, Royal Mail has not managed to rectify the situation.

Strawhorne said that the company has disappointed consumers, and the imposed fine serves as a wake-up call, urging Royal Mail to take its responsibilities more seriously. “We’ll continue to hold Royal Mail to account to make sure it improves service levels,” he said.

Royal Mail contended that certain disruptions were beyond its control, citing strikes amid a prolonged labour dispute, extreme weather conditions, and the closure of Stansted airport’s runway for resurfacing, leading to a reduction in permitted flights.

Despite these challenges, Ofcom pointed out that first-and second-class punctuality remained at only 82% and 95.5%, respectively, even when considering these external factors.

In a statement, Royal Mail said it is "very disappointed" regarding its performance, attributing the material impact on service quality to the prolonged industrial dispute, which involved 18 days of strike action.

It said punctuality is “extremely important to us” and that it is undertaking unspecified measures to enhance performance.

After admitting liability, Royal Mail was granted a 30% discount on the fine by Ofcom. The company has a two-month window to settle the fine with the government's Treasury.