UK regulator Ofcom has fined Royal Mail £1.5m (US$1.87m) for falling short on its service requirements. Ofcom notes that Royal Mail is required to deliver at least 93% of First Class post, across the UK, within one working day of collection. In 2018/2019, only 91.5% of First Class post was delivered on time.
Ofcom says it is able consider evidence submitted by Royal Mail of any exceptional circumstances, beyond the company’s control, that may explain why it missed the target by such a significant amount. But it did not provide a satisfactory explanation and it did not take sufficient steps to get back on track during the year. The regulator notes that Royal Mail’s performance improved in 2019/2020, and after taking into account the impact of Covid-19, the company met its regulatory obligations.
Royal Mail has also been fined £100,000 (US$125,000) by Ofcom for overcharging customers for Second Class stamps between March 25-31, 2019. The regulator says it set a price cap for Second Class stamps to ensure that an affordable postal service is available to everyone, while keeping the universal service financially sustainable.
For April 1, 2018 to March 31, 2019, the cap was set at 60p (US$0.75). Royal Mail increased its price for Second Class stamps to 61p (US$0.77) on 25 March 2019, thereby overcharging customers for seven days until the cap increased on April 1, 2019. The company estimated that it overcharged people by approximately £60,000 in total as a result, which it is unable to refund.
Given the harm it felt was caused and Royal Mail’s failure in its processes to stick to the price cap, Ofcom decided to implement the £100,000 fine. The company has since made changes to its compliance processes that it says will prevent this error happening again.
Gaucho Rasmussen, Ofcom’s director of investigations and enforcement, explained, “Many people depend on postal services, and our rules are there to ensure they get a good service, at an affordable price. Royal Mail let its customers down, and these fines should serve as a reminder that we’ll take action when companies fall short.”