Royal Mail fined £1.6million for late deliveries and overcharging

ROYAL Mail has been fined £1.6million by regulator Ofcom for delivering letters late and overcharging for stamps.

Ofcom said Royal Mail missed its target of delivering 93 per cent of first class post within a day of collection.

It also overcharged people £60,000 after raising the cost of a second class stamp before a price cap was lifted.

Royal Mail admitted it was “disappointed” with its performance but argued that its performance was hindered by roadworks carried out by Highways England.

However the watchdog said it still underperformed, even adjusting for the impact of disruption.

Ofcom requires the postal service to deliver 93% of first-class post within one working day of collecting it but Royal Mail undershot the target, with only 91.5% of post arriving on time during the 2018-19 financial year.

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.”

Ofcom fined Royal Mail £1.5m for the breach of obligations, which it said was not repeated in 2019 once the impact of Covid-19 was taken into account.

The regulator also issued an additional fine of £100,000 after it found that Royal Mail had overcharged customers for second-class stamps for a week in March 2019.

The watchdog found that the company increased its price for second class stamps by 1p to 61p seven days ahead of the official cap being lifted.

Royal Mail estimates it overcharged people by £60,000 “which it is unable to refund” and said it had donated the sum to the charity Action for Children.

“We worked with Ofcom throughout this investigation and lessons have been learned by us during this process,” it said.

Earlier this year, Royal Mail lifted the price of a first class stamp, which now costs 11p more than second class postage.

The price of a first class stamp for

Despite our best endeavours, some areas of the UK experienced a reduction in service levels during March

regular letters rose 6p to 76p and second-class went up by 4p to 65p.

The 65p second-class stamp is the maximum under an Ofcom price cap.

“Given the harm caused and failure in its processes to stick to the price cap, we have decided to fine Royal Mail £100,000,” Ofcom said.

“It has since made changes to its compliance processes that it says will prevent this error from happening again.”

Commenting in the current financial year, Royal Mail said it would be on course to hit the 93% first class delivery target if it hadn’t been for the coronavirus outbreak.

“Despite our best endeavours, some areas of the UK experienced a reduction in service levels during March,” it said.

“Relevant factors included high levels of coronavirus-related absences and necessary social distancing measures.”

Last month Royal Mail said it will cut 2,000 management jobs as it struggles to deal with the effects of the coronavirus crisis. The cuts, equal to around a fifth of the company’s management roles, aim to save about £130m in costs from next year.

Royal Mail said the Covid-19 pandemic had accelerated the trend of more parcels and fewer letters being sent, and it had not adapted quickly enough to that.

Letter volumes fell by one-third last month, to 308m.

The company said its 90,000 postal workers would not be affected by the cuts but confirmed there would be a gradual decline in frontline workers as it started to automate the processing of letters and parcels.

It follows the sudden departure of the firm’s chief executive Rico Back, who stepped down in May after less than two years in the role.

His resignation came after the company reported a £22m decline in UK revenues in April.

Mr Back, 66, who has been with Royal Mail for 30 years, clashed with unions over restructuring plans.

The German-born executive was also sharply criticised for remaining in Switzerland, his country of residence, during the coronavirus outbreak.

He has been replaced in the interim by chairman Keith Williams, who is a former chief executive of British Airways.