Postcomm gives Royal Mail notice of £7.5 million penalty for quality failures
30 September 2003
Postcomm today gave Royal Mail 28 days notice that it intends to impose a financial penalty of £7.5m on it for failings in its service to customers.
The penalty relates to two of Royal Mail’s services used by business customers: First Class Post Paid Impression (PPI) and First Class Response Services. Postcomm imposed an enforcement order on Royal Mail last December in relation to these products. The order required Royal Mail to take certain basic steps to ensure that service quality improved. In spite of this, Postcomm found that Royal Mail failed to do enough to ensure these services met their targets. The company’s performance was around 6% below the agreed licensed targets for the year for both products.
The amount of the penalty takes account of the fact that there is as yet no mechanism by which Royal Mail can be made to pay compensation direct to the customers affected. Postcomm intends to finalise a compensation scheme very shortly.
Postcomm Chairman Graham Corbett said:-
“Most businesses lose customers and lose money when they provide poor service. I hope that this penalty will drive home to people at all levels in Royal Mail the message that customer service matters.”
Royal Mail and others have 28 days to make representations to Postcomm in relation to the proposed penalty.
Notes for editors
Royal Mail’s First Class PPI and First Class Response Services were subject to an enforcement order for three months up to 31 March 2003. The target for both services is delivery of 92.5% of post the next day. For February and March 2003 (the period for which the target was measured), First Class PPI recorded 86.3% and First Class Response Services 86.8%.
Under Royal Mail’s licence, the company commits a breach if it fails to meet a service quality target and can be shown not to have used all reasonable endeavours to try to meet it. That was Postcomm’s finding in relation to these two products for 2002/3.
The Commission believes that Royal Mail had not followed its own audit processes in checking service quality and had not made all reasonable endeavours to meet the service standards consistently across the country.
If confirmed, the penalty will be payable in one instalment, 49 days after the imposition of the penalty. Postcomm is developing a compensation scheme for late mail to provide customers with redress against Royal Mail if it provides poor service in the future.
