Royal Mail has been hit with a hefty £11.7 million fine for failing to deliver letters and parcels on time and prevent them from being lost, stolen or damaged in transit.
In a damning indictment of Royal Mail’s efficiency as it faces up to full market competition, Postcomm, the regulator, said it found “serious breaches” of the company’s obligations to deliver letters and parcels on time.
Postcomm said some “important features” of Royal Mail’s procedures were not being applied across the board and said its measures to prevent the loss, theft or damage of mail were “not operating effectively”.
The regulator also said Royal Mail was suffering from poor management of its processes for recruiting and training non-contract, or agency, staff.
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But Royal Mail was quick to hit back, branding the size of the fine “unreasonable” and the findings of Postcomm’s investigation no longer relevant. The company said it would do everything in its power to appeal.
Today’s fine comes after a series of allegations were levelled against Royal Mail, including a Channel 4 Dispatches TV programme that called into question its safety and security procedures. Postcomm launched an investigation into some of the allegations, and followed up its own concerns about the “integrity” of Royal Mail’s service.
The regulator reviewed Royal Mail’s performance between August 2004 and May last year.
This is the biggest ever fine to be slapped on Royal Mail, which ended its 350-year monopoly of delivering the nation’s post at the beginning of the year. It comes after a review of Royal Mail’s effectiveness that was launched by Postcomm in 2003 ended last year.
It also comes amid reports that Royal Mail is poised to lose lucrative and high-profile corporate customers at the BBC broadcaster, banking groups HSBC and HBoS, as well as telecoms groups O2 and Orange.
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Nigel Stapleton, chairman of Postcomm, said: “Customers are entitled to expect that when they post mail it will reach its destination. But during 2004/05, around 14.6 million letters, packets and parcels in Royal Mail’s care were lost, stolen, damaged or interfered with.”
The fine relates to Royal Mail’s apparent failure to protect the post during 2004 and 2005 and also includes a £271,000 charge for poor delivery in three London postcodes - SE, WC and E.
But Royal Mail countered: “The fine far exceeds those levied by other sectoral regulators for similar licence breaches (ranging between £25,000 and £1 million and generally to the lower end of that scale.
“We believe it is completely inconsistent for Postcomm to impose a fine of £11.38 million and, at the same time, indicate that there is no necessity for an enforcement order.”
Royal Mail, chaired by Allan Leighton, said the amount of lost mail has halved over the past three years. It said 99.93 per cent of the 22 billion letter sent in the UK arrive safely and “only a tiny fraction” of those that do not are stolen. It said it was currently providing the best quality of service in its history and that the “vast bulk” of mail arrives safely and on time.
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It also said that the review covered a period in its history when it was undergoing “massive operational change”.
But Mr Stapleton at Postcomm added: “Although Postcomm has observed significant efforts by Royal Mail to improve since our review was completed in May 2005, the fact remains that these shortcomings existed over a prolonged period. The level of this proposed financial penalty reflects the commission’s view of the extent and seriousness of the licence breaches.”