Services improve, but Consignia breaches its licence

12 August 2002

In a letter to Consignia today, Postcomm says it is concerned at the company’s failure to meet important standards of service for 2001-2002 and will review Consignia’s plans to improve its services for the current financial year.

Postcomm said Consignia had made a major effort to improve service quality, and its overall performance improved significantly in 2001-2002. As a result it had met some of its targets but still missed several others.

For some of those services where the target was missed, Postcomm believed Consignia had not contravened its licence because it had made reasonable endeavours to meet the standards specified. However, Postcomm says it will review the detail of Consignia’s current action plan for 2002/2003 for improving its quality of service to see whether it is adequate. If not, Consignia will face enforcement action to ensure customers receive the agreed standards of service. Postcomm is particularly concerned at poor delivery performance in individual postcode areas. These were well below target, but improved significantly in the fourth quarter. Postcomm wants this improvement maintained.

In the case of two of its business services - 1st and 2nd class response services - Postcomm believed that Consignia had not tried hard enough. Consignia had therefore contravened its licence by failing to use “all reasonable endeavours” to achieve its end of year licence targets. Postcomm’s board of commissioners considered imposing a monetary penalty but felt that at this stage it would have been counter-productive. Instead, Postcomm is working with Postwatch, the consumer body, and Consignia, on arrangements within its licence which will require Consignia to pay compensation to customers if it fails to meet its licensed targets in future.

The compensation scheme is expected to be published along with Postcomm’s price control proposals within the next month. Had a financial penalty been imposed this time, based on the proposals being developed, it might have amounted to £8 million.

Notes for editors

Consignia announced its quality of service results for the period 1 April 2001 to 31 March 2002 on 31 May.

Enforcement action could require Consignia to prepare further detailed action plans and targets for the failing service, with a financial penalty being imposed if they were not met.

More and information on Royal Mail's quality of service and full list of related documents.