The regulator made the recommendation alongside plans to bring in new protections for parcel customers. This will require all parcel firms to tighten up complaints handling, and bring in better protections for disabled customers.
Regarding Royal Mail and its Universal Service Obligation (USO), Ofcom stated: “While the short-term sustainability of the universal service appears to be more secure than it was, the longer-term outlook remains uncertain.
“Royal Mail must adapt to the changing market, modernise its parcels operations and become more efficient, if the universal service is to be financially sustainable in the longer term. The main drivers for this are ultimately within the company’s control.”
Ofcom also said it continued to be “concerned about Royal Mail’s efficiency performance”.
“To increase our understanding of its longer-term sustainability outlook for the universal service, we propose requiring the company to set out its longer-term efficiency ambition and report publicly on progress against this.”
In response, Royal Mail said that it was important for the regulatory framework to support innovation, and said it supported Ofcom’s proposal not to extend Access regulation.
However Royal Mail also said it was “disappointed” that Ofcom has not taken up the opportunity to allow the group to offer tracking on USO services.
“Consumers increasingly demand more visibility over their deliveries. We have requested the ability to offer tracking on USO services so that we can deliver better outcomes for all customers, in line with Ofcom’s stated goals,” Royal Mail stated.
“Tracking gives customers more control and the information they need to complain in the event that things do go wrong. The postal sector and consumer needs are changing at an unprecedented rate, and it is important that the regulatory system enables us to adapt at pace.”
Regarding parcels, Royal Mail is already subject to the type of guidance being proposed, which it said would “level the playing field amongst all parcel operators”.
The consultation on Ofcom’s review of postal regulation closes on 3 March 2022, with a statement on the final decisions made expected next summer.
Ofcom also published its Annual Monitoring Report on the Postal Market for 2020-21 alongside the new proposals.
This found that Royal Mail’s performance was “substantially below the regulatory targets” due to increased absence levels because of the pandemic, social distancing, and a significant increase in parcel volumes.
The Royal Mail quality of service 2020-21 summary from Ofcom's annual monitoring report
Separately, the BBC has reported that Royal Mail services are suffering in some locations due to high levels of staff absence, including an allegation that tracked parcels are being given priority over letters at some delivery offices.
This morning (13 December) Royal Mail also announced the sale of its three remaining plots at the huge Nine Elms redevelopment site in Battersea, London, in a £111.23m deal.
