The regulator announced the fine this morning (13 November).
In 2022/23 Royal Mail’s performance fell well short of its performance targets.
It only delivered 73.7% of First Class mail on time against a target of 93%, while the figure for Second Class was 90.7% compared with the targeted 98.5%.
Royal Mail’s performance on delivery routes – where it is supposed to complete 99.9% of routes on days where a delivery is required – was also below target at 89.3%.
Ofcom said that even when adjusted for last year’s industrial action, extreme weather and the Stansted Airport runway closure for resurfacing works, Royal Mail “breached its obligations by failing to meet its targets by a significant and unexplained margin”.
Ofcom director of enforcement Ian Strawhorne commented: “Royal Mail’s role in our lives carries huge responsibility and we know from our research that customers value reliability and consistency.”
He noted that while the pandemic had a significant impact on Royal Mail’s operations in previous years, the company had been warned that 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.”
The fine of £5.6m includes a 30% reduction because Royal Mail admitted liability and agreed to settle the case. It must be paid to HM Treasury within two months.
Royal Mail issued a statement in response, that said: “We are very disappointed with our Quality of Service performance in 2022-23 and acknowledge Ofcom’s decision today.
“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. We are pleased that Ofcom has acknowledged that elements outside of Royal Mail’s control had a significant impact on service levels and has adjusted the figures to 82% for First Class and 95.5% for Second Class mail.
“Quality of Service is extremely important to us. We take our commitment to delivering a high level of service seriously and are taking action to introduce measures to restore quality of service to the level our customers expect.”
Ofcom also looked into allegations that Royal Mail had been prioritising parcels over letters.
While the evidence reviewed did not show that senior management at Royal Mail had directed the prioritisation of parcels “outside of recognised contingency plans”, Ofcom said it had concerns that Royal Mail appeared to have “insufficient control, visibility and oversight over local decision-making at certain delivery offices”, where high absence and vacancies may have led to customer operations managers – who have responsibility for individual delivery offices – making “on the day” decisions about what to deliver.
“Royal Mail must ensure its customer operations managers are provided with appropriate training, so they are equipped to make such decisions. We will be keeping a close eye on the company’s performance this year, and the steps it is taking to return delivery offices to pre-Covid practices,” Ofcom stated.
Royal Mail has called for the Universal Service Obligation (USO) to be reduced to a Monday-to-Friday service and has blamed the lack of reform on recent stamp price hikes. An Ofcom review into the future shape of the universal postal service began in September.
