Ofcom fines Royal Mail £10.5m for late deliveries

Britain’s communications regulator has slapped Royal Mail with a fine for late deliveries for the second time since the pandemic.

Ofcom levied a £10.5million fine after it found that Royal Mail had only delivered 74.7 per cent of first-class mail and 92.7 per cent of second-class post on time between April 2023 and March 2024.

The postal service is legally required to deliver 93 per cent of first-class mail within one working day of collection and 98.5 per cent of second-class mail within three working days of collection.

Royal Mail claimed the targets were missed due to its difficult financial situation and delays to the ballot on a pay deal following industrial action by the Communication Workers’ Union last year.

However, Ofcom said neither of these excuses were ‘justifiable reasons’ for the firm providing an insufficient level of service.

While acknowledging that Royal Mail has lost hundreds of millions of pounds, it insisted that the company bore ultimate responsibility for managing its fiscal position. 

Targets missed: Ofcom found that Royal Mail had only delivered three-quarters of first-class mail and 92.7 per cent of second-class post on time between April 2023 and March 2024

It added that the group took ‘insufficient and ineffective steps to try and prevent this failure, which is likely to have impacted millions of customers who did not get the service they paid for’.

Because Royal Mail acknowledged liability and agreed to settle the case, its fine has been reduced by 30 per cent from £15million to £10.5million.

Ofcom previously fined the business £5.6million in November 2023 for falling short of its targets in the 2022/23 financial year by a ‘significant and unexplained margin’.

Royal Mail has breached its regulatory obligations in every year since 2019/20, but avoided penalties from Ofcom during the Covid-19 pandemic, when its operations were severely impacted.

Ian Strawhorne, director of enforcement at Ofcom, said Royal Mail’s performance was ‘eroding public trust in one of the UK’s oldest institutions’.

He added: ‘Royal Mail has provided an improvement plan, and we’re seeing some signs of progress, but it must go further and faster to deliver the service that people expect.’

Royal Mail’s latest penalty comes as Czech billionaire Daniel Kretinsky closes in on acquiring the firm’s parent company, International Distribution Services. 

The proposed £3.6billion takeover has generated significant controversy, partly due to Royal Mail’s vital role in the UK’s communications infrastructure and Kretinsky’s commercial ties in Russia. 

Should he finalise the deal, Royal Mail would be foreign-owned for the first time since being founded in 1516 during King Henry VIII’s reign. 

International Distribution Services shares were only 0.2p down at 357.8p on late Friday morning. 

Many London-listed firms have fallen into overseas hands in recent years, driven by a 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 maker TI Fluid Systems have also struck billion-pound takeover deals.