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Royal Mail fined £1.6m for delivery failures and overcharging customers

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Royal Mail has been fined £1.5m for failing to meet first-class delivery targets and a further £100,000 for overcharging customers buying second-class stamps.

The industry regulator, Ofcom, said Royal Mail is required to deliver at least 93% of first-class post across the UK within one working day of collection.

However, in 2018/19, it achieved 91.5% – missing the target by a “significant amount”, it said.

Ofcom said it can consider evidence of exceptional circumstances if the target is missed, but added that Royal Mail didn’t provide a satisfactory explanation after citing the impact of Highways England’s road investment programme. Further, Ofcom said it didn’t take sufficient steps to get back on track during the year.

However, Ofcom noted that Royal Mail’s performance improved in 2019/20 after taking into account the impact of coronavirus, and met its regulatory obligations.

Ofcom also imposed a further £100,000 fine for overcharging customers for second-class stamps between 25 and 31 March last year.

A 60p price cap was in force until 31 March 2019 but Royal Mail increased the price of second-class stamps to 61p on 25 March. This meant customers were overcharged over the course of a week, with estimates suggesting it reaped £60,000 extra as a result, which it is unable to refund.

Gaucho Rasmussen, Ofcom’s director of investigations and enforcement, said: “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.”

The fines will be passed on to HM Treasury.

‘We are disappointed’

Royal Mail said it is disappointed with its first-class delivery performance and “accepts and understands Ofcom’s decision”.

A statement read: “We are pleased Ofcom has taken into account the unprecedented impact of the coronavirus pandemic on our operation when assessing our 2019/20 First Class Quality of Service performance. We worked hard to restore our service quality in 2019/20 and, were it not for the pandemic and its impact on our business in the latter half of March, we were on course to deliver the requisite First Class regulated Quality of Service target (93%).

“Despite our best endeavours, some areas of the UK experienced a reduction in service levels during March. Relevant factors included high levels of coronavirus-related absences and necessary social distancing measures.

“We accept and note Ofcom’s decision around the 2019 Second Class price cap. We made a mistake. Due to an error on our part, our price for Second Class stamps was 1p above the requisite regulatory cap for seven days. At the time, we sought to put this error right by publicly acknowledging our mistake.”

Royal Mail added it donated the £60,000 revenue to charity Action for Children which helps young people at risk of developing mental health problems.

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