Royal Mail ‘disappointed’ after Ofcom extends unchanged regulations

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Royal Mail has said it is disappointed Ofcom has decided to retain the current framework for postal regulation until 2022.

Ofcom conducted a review of Royal Mail, concluding that people are largely happy with postal services and the company’s delivery performance has improved since Ofcom’s framework was put in place in 2012. This followed pressure put on the universal postal service that saw it incur a loss of £100m (US$123m) in 2011 as people continued to send fewer letters.

As postal regulator, Ofcom secures the universal postal service, requiring Royal Mail to deliver to every address in the UK for six days per week at a standard price.

Royal Mail is exempt from performance targets during December to reflect the volume of Christmas deliveries, but newer retail promotion days such as Black Friday and Cyber Monday usually fall in November.

Ofcom concluded that it would not impose fines on Royal Mail for missing its 93% First Class delivery target for 2015/16 due to delivery hikes such as these that are out of its control, and said it will consider whether any changes to the rules are needed to reflect these shifting online shopping habits.

Jonathan Oxley, Ofcom’s competition director, said, “We know people value the universal postal service and we will continue to ensure that it remains effective. Our review has shown that current rules are generally working well for companies and households.

“Royal Mail still has room to improve. We’ll keep a very close eye on all aspects of the company’s performance, and step in if we need to protect consumers from high prices.”

Ofcom has decided not to impose new controls on Royal Mail’s wholesale or retail prices, as the company already has strong commercial incentives to improve its efficiency.

Despite increasing competition in the parcels sector, Ofcom also found that Royal Mail retains an advantage in the delivery of small, individual parcels, leading to the decision to keep the cap on Second Class parcel prices in place.

Sally Hopkins, senior external relations manager at Royal Mail, commented, “Royal Mail plc notes that Ofcom continues to find high levels of customer satisfaction and value for money with postal services. Ofcom has stated that there is strong competition in the access market and has also recognized our progress on efficiency.

“We are disappointed that Ofcom does not agree with us that there is a pressing need for a pro-active framework to help sustain the universal service. We will continue to focus on delivering a high quality, value-for-money service for our customers across the UK.”

March 6, 2017

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Kirstie joined the team in early 2017 and brings writing, communications and client experience with her. Now an assistant editor, she produces content for our magazines and websites. Away from the office, you will find her blogging on her lifestyle website or searching the internet for photos of sausage dogs.

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