Ofcom fines Royal Mail £10.5m for late deliveries

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

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

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

Royal Mail said targets had been missed due to its difficult financial situation and delays in voting on a pay deal following the Communication Workers Union strike last year.

However, Ofcom said none of these excuses were “justifiable reasons” for the company to provide an insufficient level of service.

While he acknowledged that Royal Mail has lost hundreds of millions of pounds, he insisted the company had the ultimate responsibility for managing its tax situation.

He added that the group took “insufficient and ineffective measures to try to prevent this failure, which has likely affected 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 was reduced by 30 per cent, from £15 million to £10.5 million.

Ofcom previously fined the company £5.6m in November 2023 for failing to meet its targets in the 2022/23 financial year by a “significant and unexplained margin”.

Royal Mail has failed to meet its regulatory obligations every year since 2019/20, but avoided sanctions from Ofcom during the Covid-19 pandemic, when its operations were severely affected.

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

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

The latest sanction on Royal Mail comes as Czech billionaire Daniel Kretinsky moves closer to acquiring the company’s parent company, International Distribution Services.

The proposed £3.6bn acquisition has generated significant controversy, partly due to Royal Mail’s vital role in the UK’s communications infrastructure and Kretinsky’s business links in Russia.

If the deal closes, Royal Mail would be foreign owned for the first time since its founding in 1516 during the reign of King Henry VIII.

International Distribution Services Shares they were down just 0.2p to 357.8p on Friday morning.

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

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

Investment platform Hargreaves Lansdown, Robinsons Squash owner Britvic and auto parts maker TI Fluid Systems have also closed acquisition deals worth billions of pounds.