Disaster for Royal Mail as it's slapped with huge £21m fine

Royal Mail has been fined £21million for missing its annual first and second class mail delivery targets, Ofcom has said. The regulator announced the fine on Wednesday (October 15), saying this was the third time in recent years it had found the company in breach of its regulatory obligations. Royal Mail was fined £5.6m in November 2023 and £10.5m in December 2024, according to Ofcom.

Ian Strawhorne, Ofcom's Director of Enforcement, said in a statement: "Millions of important letters are arriving late, and people aren't getting what they pay for when they buy a stamp. These persistent failures are unacceptable and customers expect and deserve better." The fine is the third highest Ofcom has ever imposed. Royal Mail said it would work hard to continue improvements to its service.

Mr Strawhorne said Royal Mail must rebuild consumers' confidence as a matter of urgency, adding: "And that means making actual significant improvements, not more empty promises.

"We've told the company to publicly set out how it's going to deliver this change, and we expect to start seeing meaningful progress soon. If this doesn't happen, fines are likely to continue."

Ofcom said it measures Royal Mail's delivery performance against UK-wide annual delivery targets from April to March.

For 2024-25, the company was required to deliver 93% of First Class mail within one working day of collection and 98.5% of Second Class mail within three working days.

If Royal Mail misses its annual targets, Ofcom said it considers evidence of any exceptional circumstances beyond the company's control, such as extreme weather, and whether the company would have achieved its targets if those events hadn't happened.

Ofcom said even after accounting for exceptional weather, Royal Mail only delivered 77% of First Class mail on time and 92.5% of Second Class mail on time between April 2024 and March this year.

Ofcom said the company breached its obligations by failing to provide an acceptable service level "without justification".

The regulator accused Royal Mail of taking "insufficient and ineffective" steps to try and prevent the failure, which Ofcom said is likely to have impacted millions of customers who didn't get the service they paid for.

Royal Mail had been in line for a fine of £30m, according to Ofcom, but its admission of liability and willingness to settle the case saw the total reduced by 30%.

Ofcom said in deciding on the sum, it had considered the "harm" suffered by customers and Royal Mail's "poor" service and its having breached its obligations for three years in a row. The regulator said it had also considered Royal Mail's financial position.

Besides fining the company, Ofcom has been pressing Royal Mail for details on what it is doing to improve. Ofcom said plans from Royal Mail to achieve 85% for First Class and 97% for Second Class mail by March 2025 would have resulted in "significant" improvement, but this hasn't happened.

A Royal Mail spokesperson said the company acknowledged Ofcom's decision and would continue to work hard to deliver further sustained improvements to the quality of its service.

They added: "A key area of focus and investment has been the detailed work ahead of full implementation of our new delivery model, enabled by Ofcom's changes to the Universal Service.

"This is critical to enable us to drive a step change in quality of service. We have also implemented important changes across our network including recruiting, retaining and training our people, and providing additional support to delivery offices."

The spokesperson added that where Royal Mail has piloted Universal Service changes, it has seen the model working, including improvements in deliveries. They said: "This will help us deliver a modern, reliable and more financially sustainable postal service that meets the needs of today's postal users."