Ofcom tightens regulations for UK delivery companies

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The UK’s communications regulator, Ofcom, has proposed more regulations for UK delivery companies – including more transparent complaints systems, accessible delivery processes and commercial flexibility for Royal Mail.

According to its research, 64% of customers have had delivery problems in the past three months, and around a quarter of senders find it difficult to make a complaint or contact parcel operators when their delivery goes wrong. It also found that two in five say their complaints are only partially resolved, while almost 1 in 10 are left with their complaint completely unresolved.

Some of the most common difficulties people experienced when sending parcels included not getting through to the right person, the company refusing to take responsibility for the problem and the length of time taken to resolve it. Many people also struggled to find out how to complain in the first place. Therefore, under the additional guidance, customers must be told whom to contact and what channels they can use to make a complaint; they must also be told what the complaint process will be, and how long it will take to resolve; and delivery companies are also now required to ensure that all staff who deal with customer complaints have received appropriate training.

The organization’s evidence also suggests an inconsistent level of service across the industry with different operators achieving widely divergent customer satisfaction scores – from 29% for one operator to 71% for another. In particular, Ofcom found that disabled customers are approximately 50% more likely to experience significant problems with parcel deliveries. These include couriers not allowing enough time at the door, parcels being left in inaccessible places, and operators not acting on specific delivery instructions provided to them.

Accordingly, the organization is also proposing a new requirement for parcel firms to establish, publish and comply with clear and effective policies and procedures for the fair treatment of disabled customers. This includes ensuring that disabled customers can communicate their delivery needs to the parcel operator and setting out how couriers will meet those needs when delivering parcels. Ofcom has also made clear that if it does not see substantial improvements in customer service and complaints handling, it will consider enforcement action and further regulation.

These results were drawn from two sets of online interviews. The first 2,019 online interviews were conducted in January 2021 during a period of significant Covid-19 restrictions, high demand and operational pressures. The second round of 3,379 online interviews was completed in summer 2021, with UK adults who had sent a parcel in the last 12 months. These results have shaped the proposed regulations at an ongoing consultation, which is due to close on March 3, 2022. Following this, Ofcom expects to publish a statement on its final decisions in summer 2022.

The organization last reviewed its regulatory framework for the UK’s postal operations in 2017 and at that time said it should remain in place until 2022. However, Ofcom’s annual monitoring report has found that that people’s reliance on parcels has grown considerably throughout the Covid-19 pandemic. Growth in online shopping saw overall parcel volumes increase at a rate of around 10% per year between 2015 and 2020. Comparatively, they increased by almost 50% in 2021 compared with 2020.

Regulating the Royal Mail
As the universal service provider, Royal Mail is subject to more regulation than other postal operators. Royal Mail is required by Ofcom to deliver at least 93% of first-class postal deliveries – across the UK – within one working day of collection and 98.5% of second-class deliveries within three working days. This performance is assessed over the whole financial year but excludes the Christmas period. The safeguard price cap for second-class stamps is currently set at 66p (US$0.88). In 2019, Ofcom fined Royal Mail £1.5m (US$1.9m) for missing its 2018/19 first-class delivery target, and £100,000 (US$132,000) for overpricing second-class stamps between March 25 and March 31, 2019.

Ofcom’s review has found that these rules and safeguards are generally working well for people and businesses that use postal services. However, despite the short-term sustainability of Royal Mail being more secure than it was, the longer-term outlook appears uncertain to Ofcom. The regulating authority has, therefore, asserted that this universal service must adapt to the changing market, modernize its parcels operations and become more efficient. Giving Royal Mail commercial flexibility to respond to the changing market is therefore expected to enable it to continue to modernize its network for the digital age and secure the long-term financial sustainability of the universal service. This is intended to give Royal Mail the authority to keep itself financially sustainable. Therefore, Ofcom plans to maintain the current framework for regulating Royal Mail for a further five years.

Lindsey Fussell, Ofcom’s networks and communications group director, said, “Parcel deliveries have become increasingly important to our daily lives and customers rightly expect a positive experience. We’re planning to strengthen our rules to make sure people are treated fairly by delivery firms. If we don’t see significant improvements in customer service, we’ll consider enforcement action or tighten regulations further.”

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