UK communications regulator Ofcom has warned that parcel firms must get better at handling complaints, as it introduces new measures to help improve service standards in the industry.
According to the regulator, overall customer satisfaction with delivery services is high as competition in the parcels market has increased, but Ofcom has identified a series of problems with the way that complaints are currently handled across the industry.
Ofcom’s research from 2021 found that almost two-thirds (64%) of customers had problems with deliveries over a three-month period. Around a quarter of senders found it difficult to make a complaint, or to contact parcel operators, when their delivery did not go to plan. Two in five said their complaints are only partially resolved, while almost one in 10 are left with their complaint completely unresolved.
Lindsey Fussell, Ofcom’s networks and communications group director, said, “Deliveries are part and parcel of our daily lives. But the customer service that some people have been getting when a delivery goes wrong simply hasn’t been good enough. So we’re strengthening our regulations to make sure people are treated fairly by delivery firms. If we’re not satisfied with how parcel companies respond, they could face enforcement action or tighter rules in future.”
Improving the complaints process
To improve consumer protection, Ofcom is introducing new guidance in addition to its existing rules. It states that all postal operators must have a simple and transparent complaints process in place.
This means that parcel customers will need to be told who to contact and what channels they can use to make a complaint; told what the complaint process will be and how long it will take to resolve; and dealt with by staff who have received appropriate training.
Meeting disabled customers’ needs
Ofcom is also introducing 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.
Disabled people are more likely than able-bodied customers to experience parcel delivery problems. Issues 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.
Under the new rules, postal operators must have policies and procedures in place to ensure disabled customers can communicate their delivery needs to them, and firms will need to ensure couriers meet those needs when delivering parcels.
Royal Mail regulation
Ofcom has also set out how it will regulate Royal Mail over the next five years. As the universal service provider, it is subject to more regulation than other postal operators.
This includes Ofcom continuing to set strict annual delivery targets and imposing a cap on second-class stamp prices.
Ofcom also said that it is important that Royal Mail has the commercial flexibility to deliver efficiency improvements and modernize its operations as competition increases and the postal market continues to evolve.
As a result, Ofcom has strengthened its monitoring requirements to gain a deeper understanding of the financial sustainability and efficiency of the universal service. The new framework provides a stable regulatory environment, supporting investment by all postal operators. It ensures that Royal Mail competes on a level playing field, allowing competition to drive benefits to postal users.
Royal Mail responded to Ofcom’s announcement saying that the regulatory review does not go far enough to address the challenges facing the business. A statement said, “We are very disappointed that Ofcom has not taken the opportunity to allow Royal Mail to offer tracking on the products we offer the general public under the universal service. Tracking is no longer seen as an optional extra or a premium offer – it is a necessity. The very purpose of the universal service is to offer postal services not provided by the market at a uniform affordable price throughout the UK – and tracking for all, at an affordable and common price for everyone, should be a feature of a modern postal universal service in 2022. If regulation is a blocker to modernization, it will increasingly put the finances of the universal service at risk, threatening the ongoing sustainability of the one-price-goes-anywhere postal services that customers rely on. We urge Ofcom to reconsider this decision.”
Commenting on Ofcom’s changes to customer complaint standards, Royal Mail said, “Ofcom proposes to issue guidance to all parcel firms regarding their complaints handling procedures, including setting out who to contact, how the complaints process works and how long the complaint will take to resolve. As the universal service provider, Royal Mail’s USO services are already subject to this type of guidance and we recognize Ofcom’s efforts to level the playing field among all parcel operators.”
Royal Mail plc board warns of potential split from GLS
Royal Mail recently released its trading update for the first quarter of 2022, running from April to June. It reported that revenue was down 11.5% year-on-year in the first quarter, reflecting weakening retail trends, lower Covid test kit volumes and a return to structural decline in letters.
It also announced that the holding company Royal Mail plc will be renamed International Distributions Services plc to reflect the group structure of two separate companies (Royal Mail and GLS). Its intention is to have clearer financial separation with no cross-subsidy, reflecting the increased importance of GLS to the group and its position in the wider logistics and distribution markets.
In the event that significant operational change within Royal Mail in the UK is not achieved, the board will consider all options to protect the value and prospects of the group, including separation of the two companies.
Keith Williams, chair of Royal Mail Group, commented, “While GLS delivered a solid performance in the first quarter, the performance of Royal Mail was disappointing, with an adjusted operating loss of £92m [US$110m] resulting from a decline in parcel volumes post the pandemic and a lack of progress in delivering efficiencies.
“The pandemic boom in parcel volumes, bolstered by the delivery of test kits and parcels, is over. Royal Mail is currently losing £1m per day and the efficiency improvements that are needed for long-term success have stalled.
“We can, however, be a long-term success story. We have advantages in scale and reach and a strong balance sheet and asset base, which are the foundations for a successful future. We need to act now in moving to that future in the interests of all stakeholders, employing those advantages to the maximum,” he said.
Simon Thompson, CEO of Royal Mail, said, “We have made progress building the infrastructure we need for Royal Mail to compete, especially given the growing demand for larger parcels, delivering the next day – including Sundays – and in a more environmentally friendly way. But building the infrastructure is not enough. We have to transform the way we work, too. We need to change – and change now. This is how we can give our team the job security that they deserve for tomorrow and not just for today. I am ready to talk about pay and change at any time. But it has to be both.”
Martin Seidenberg, CEO of GLS, said, “GLS continues to deliver a good performance, with weaker B2C volumes partly offset by growth in B2B. Pricing actions have mitigated volume declines and revenue grew by 9.8% year-on-year in euro terms. Given inflationary pressures, operating profit margin contracted, as expected. While we anticipate further cost pressures in the second half, we are maintaining our full-year outlook.”