Investigation into Royal Mail's quality of service performance in 2018/19

Following our investigation, Ofcom has today issued Royal Mail with a Decision finding that it contravened DUSP condition 1.9.1 by failing to meet certain performance targets associated with first class mail delivery during 2018/19. It also sets out our decision to impose a financial penalty on Royal Mail for its failure to meet the first class national performance target.

Ofcom has discretion to adjust Royal Mail’s performance to take into account the impact of events which Ofcom considers to be exceptional and which affected its performance. After adjusting Royal Mail’s performance to take into account the impact of Highways England’s road investment programme, Royal Mail still failed to meet the first class national and Postcode Area (PCA) performance targets by a significant margin:

• With adjustment, Royal Mail’s maximum first class national performance was 91.9% (falling below the 93.0% target); and
• With adjustment, Royal Mail’s maximum PCA performance was 91.5% in 108 of 118 PCAs (falling below the 118 PCA target).

Ofcom takes compliance with performance targets very seriously and has imposed a financial penalty of £1.5 million on Royal Mail for its failure to meet its first class national performance target. A financial penalty has not been imposed in relation to Royal Mail’s failure to comply with the first class PCA performance target.

More details can be found in our press release.

DUSP condition 1.9.1 requires Royal Mail to meet specified performance targets associated with the quality of service of the provision of universal service products. In particular, the condition sets a national and postcode area standard relating to First Class mail which requires a minimum proportion of First Class mail to be delivered within one working day of collection. These targets are important to ensure that consumers receive a satisfactory level of service.

On 17 May 2019, Royal Mail announced that it had failed to meet its performance targets relating to First Class mail in 2018/19. Royal Mail reported performance of 91.5% against its First Class national standard of 93% and reported meeting its postcode area target in 75 of 118 postcode areas.

Ofcom takes compliance with quality of service targets very seriously. Having considered Royal Mail’s announcement, we have opened an investigation to determine whether there are reasonable grounds for believing that Royal Mail has failed to comply with its obligations under DUSP condition 1.9.1 in respect of the financial year 2018/19.