Ofcom has announced that Royal Mail will be issued a £21m (US$28m) fine after it failed to meet First and Second Class delivery targets in the 2024/25 financial year.
This is the third time in recent years that the UK postal industry regulator has found Royal Mail to be in breach of its regulatory obligations. The post was fined £5.6m (US$7.5m) in November 2023 and £10.5m ($14m) in December 2024.
Ian Strawhorne, director of enforcement at Ofcom, said, “Millions of important letters are arriving late, and people aren’t getting what they pay for when they buy a stamp. These persistent failures are unacceptable, and customers expect and deserve better.
“Royal Mail must rebuild consumers’ confidence as a matter of urgency. And that means making actual significant improvements, not more empty promises. We’ve told the company to publicly set out how it’s going to deliver this change, and we expect to start seeing meaningful progress soon. If this doesn’t happen, fines are likely to continue.”
How the decision was made
Royal Mail’s delivery performance was measured against nationwide annual delivery targets, from April 2024 to March 2025.
Within this period, the company was required to delivery 93% of First Class mail within one working day of collection, and 98.5% of Second Class mail within three working days.
If annual targets are missed, Ofcom considers evidence of any exceptional circumstances beyond the company’s control – such as extreme weather – and whether the targets would have been achieved had those events not occurred.
Even after accounting for exceptional weather events, Royal Mail only delivered 77% of First Class mail on time and 92.5% of Second Class mail on time.
It was found that the company had failed to provide an acceptable level of service without justification, and that insufficient and ineffective steps were taken to prevent this failure. Consequently, Ofcom says it is likely that millions of customers did not get the service they paid for.
Calculating the penalty
This is the third-largest fine Ofcom has ever imposed, and the £21m will be passed in full to HM Treasury. The figure includes a 30% reduction from the £30m (US$40m) that would have otherwise been imposed, reflecting Royal Mail’s admission of liability and agreement to settle the case.
In deciding the amount of the fine, Ofcom considered the level of harm suffered by customers and the fact that Royal Mail has breached its obligations in three consecutive years. Furthermore, because Ofcom has a duty to ensure the universal postal service is sustainable, Royal Mail’s overall financial position was considered.
Action to improve performance
Ofcom says it has been pushing the post regularly to improve performance. Royal Mail produced an improvement plan for 2024/25, aiming to achieve 85% for First Class mail and 97% for Second Class mail. This would have amounted to a significant improvement but didn’t materialize.
The company has been pressed to urgently publish and implement a credible plan that delivers significant and continuous improvement.
In July, Ofcom has made changes to Royal Mail’s service requirements to improve the service for customers