UK's Ofcom investigates Royal Mail over missed delivery targets

·2-min read
A postal worker makes a delivery in London

(Reuters) -Ofcom, Britain's communications regulator, said it launched an investigation on Monday into Royal Mail's failure to meet delivery targets over the past year, adding it would consider imposing a financial penalty.

Royal Mail blamed union disputes that led to strikes for its failure to meet the targets for the year to end-March, 2023.

In its quality of service report released on Monday, Royal Mail said that 73.7% of first class mail was delivered within one working day, compared with a universal service obligation (USO) target of 93%.

"In deciding whether the company is in breach of its obligations, we will consider if there were any exceptional events – beyond the company's control – that may have explained why it missed its targets," Ofcom said in a statement.

"If it does not provide a satisfactory explanation and we determine that Royal Mail has failed to comply with its obligations, we may consider whether to impose a financial penalty."

Ofcom opened a similar investigation last year over the company's performance in the 2021-2022 year. Royal Mail blamed disruptions related to the pandemic, while the regulator concluded the company was not in breach of its regulatory obligations.

A total of 18 days of strikes by Royal Mail postal workers between August and December cost the parcels and postal company more than 200 million pounds ($252.42 million).

"We are disappointed with our quality of service performance and restoring our service to the high standards our customers expect is our top priority. We will participate fully with any Ofcom’s investigation," Royal Mail said in an emailed statement.

Shares in parent company, International Distributions Services Plc (IDS), were down about 1% in afternoon trade.

The investigation comes as Royal Mail has also been struggling in the past year with disruption to its international services caused by a cyber attack, falling parcels volumes and a slide in letters.

Its CEO Simon Thompson plans to step down later this year, IDS said last week.

($1 = 0.7923 pounds)

(Reporting by Eva Mathews in Bengaluru; Additional reporting by Anchal Rana; Editing by Rashmi Aich and Sharon Singleton)