Ofcom fines Royal Mail £10.5m for late delivery

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

Ofcom imposed a £10.5 million fine after it found that Royal Mail delivered 74.7 per cent of first class mail and 92.7 per cent of second class mail in the period between April 2023 and March 2024.

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

Royal Mail said it missed targets due to a difficult financial situation and a delay in a vote on pay following action by the Communications Workers’ Union last year.

However, Ofcom said none of these excuses were a ‘justifiable reason’ for the firm providing the lowest possible service.

Despite admitting that Royal Mail had lost hundreds of millions of pounds, the company insisted it took full responsibility for managing its financial position.

It added that the group had done ‘little and ineffective work to tackle and prevent this inefficiency, which may have affected millions of customers who did not receive the service they paid for’.

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

Ofcom previously fined the business £5.6 million in November 2023 for missing its targets in the 2022/23 financial year due to ‘excessive and unexplained overdrafts’.

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

Ian Strawhorne, Ofcom’s director of oversight, said Royal Mail’s actions had ‘undermined public trust in one of Britain’s oldest institutions’.

He added: ‘Royal Mail has given us an improvement plan and we are seeing some signs of progress, but we need to continue to deliver the services people expect.’

Royal Mail’s latest blow comes as Czech billionaire Daniel Kretinsky closes in on a bid to buy the firm’s parent company, International Distribution Services.

The £3.6 billion takeover has sparked huge controversy, given Royal Mail’s significant role in the UK’s communications infrastructure and Kretinsky’s commercial ties in Russia.

If he gets the deal, Royal Mail will take over for the first time since it was founded in 1516 during the reign of King Henry VIII.

Shares of Global Distribution Services it was up just 0.2p from 357.8pi late Friday morning.

Many London-listed firms have failed overseas in recent years, perceived as undervalued compared to their international peers.

In 2024 alone, cybersecurity specialist Darktrace, veterinary product maker Dechra Pharmaceuticals, and electronics manufacturing company Smart Metering Systems were all purchased by private equity firms.

Investment foundation Hargreaves Lansdown, Robinsons Squash owner Britvic, and auto parts maker TI Fluid Systems have also hit billion pound sales.