Ofcom fines Royal Mail £10.5 million for late deliveries

Britain’s communications regulator has fined Royal Mail for late deliveries for the second time since the pandemic.

Ofcom imposed a £10.5 million fine after finding that Royal Mail had only delivered 74.7 percent of first class mail and 92.7 percent of second class mail on time between April 2023 and March 2024.

The Postal Service is required by law to deliver 93 percent of first-class mail within one business day of collection and 98.5 percent of second-class mail within three business days of collection.

Royal Mail claimed targets had not been met due to its difficult financial situation and delays in voting on a pay deal following industrial action by the Communication Workers’ Union last year.

However, Ofcom said none of these excuses were ‘justified reasons’ for the company providing an inadequate level of service.

While it acknowledged that Royal Mail has lost hundreds of millions of pounds, it stressed that the company bore ultimate responsibility for managing its budget position.

It added that the group took “insufficient and ineffective steps to try to prevent this failure, which is likely to have affected millions of customers who did not receive the service they paid for.”

Because Royal Mail admitted liability and agreed to settle the case, the fine has been reduced by 30 percent from £15 million to £10.5 million.

Ofcom previously fined the company £5.6m in November 2023 for missing its targets for the 2022/2023 financial year by a ‘significant and unexplained margin’.

Royal Mail has breached its legal obligations every year since 2019/20, but avoided fines from Ofcom during the Covid-19 pandemic when its operations were seriously affected.

Ian Strawhorne, director of enforcement at Ofcom, said Royal Mail’s performance was “eroding public confidence in one of Britain’s oldest institutions.”

He added: ‘Royal Mail has an improvement plan in place and we are seeing some signs of progress, but it needs to go further and faster to deliver the service people expect.’

Royal Mail’s latest fine comes as Czech billionaire Daniel Kretinsky nears the takeover of the company’s parent company, International Distribution Services.

The proposed £3.6 billion takeover has caused controversy, partly due to Royal Mail’s crucial role in Britain’s communications infrastructure and Kretinsky’s commercial ties with Russia.

Should he complete the deal, Royal Mail would fall into foreign hands for the first time since its founding in 1516, during the reign of King Henry VIII.

Shares International Distribution Services were only 0.2p lower at 357.8p late on Friday morning.

Many London-listed companies have fallen into foreign ownership in recent years, driven by the perception that they are undervalued relative to their global peers.

Just in 2024, cybersecurity specialist Darktrace, veterinary products manufacturer Dechra Pharmaceuticals and energy investment company Smart Metering Systems were all bought by private equity firms.

Investment platform Hargreaves Lansdown, Robinsons Squash owner Britvic and car parts manufacturer TI Fluid Systems have also signed takeover deals worth billions of pounds.