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Ofcom scraps change to UK’s business mail returns pricing

Wednesday, June 6th, 2012

UK postal regulator Ofcom has bowed to a request by Royal Mail to keep business mailers paying retail First Class stamp prices for the return of undelivered mail, rather than metered/franked mail rates.

But, it said the issue should be looked into more closely.

The regulator was updating its operating terms and conditions for UK postal operators, known as the Postal Common Operational Procedures Agreement (PCOPA), in the light of its new regulatory framework.

But among the proposals was the suggestion that standard returns charges for business mailers should no longer be based on Royal Mail’s First Class stamp rates.

Ofcom had said when the definition of returns charges had been set within the PCOPA, there had been no difference in stamp and meter prices for mail, but “there is now a significant difference between the public service price for busineses and the public service price for individuals”.

Royal Mail increased its First Class stamp prices 30% in April, while business mail rates went up by on average 11%.

Nevertheless, the regulator has now decided not to change the situation for business mailers to switch to the lower metered rate for returns.

It agreed that there could be additional costs to Royal Mail in processing items to be returned above the costs covered by metered mail rates, requiring the retail stamp price to cover them. Royal Mail said the returns charges needed to cover things like bundling and readdressing of mail items.

Ofcom also noted in its decision that Royal Mail is currently reviewing its returns charges anyway, since they have not been reviewed since being set in 2005.

The regulator suggested that the difference in postal rates that now exists between First Class stamps and metered mail should still be considered further regarding returns charges.

“We currently intend to do that within our wider review of the Postal Common Operational Procedures Code and its related Agreement,” said Ofcom.

Membership

Within its response to the Ofcom consultation on the PCOPA changes, Royal Mail expressed its concern with the lack of enforcement for the requirement for postal operators to sign up to the Agreement.

The company said as of September 2011 there were 59 regulated postal operators in the UK, but that Royal Mail as the PCOPA secretary had signed copies of the agreement from only 17 of these companies.

Royal Mail, which said it had expressed concerns about the issue on three previous occasions, suggested that if more private companies look to get involved in providing end-to-end postal delivery services, for example as TNT Post UK hopes to roll out, more mail may be delayed if operators are not part of the agreement.

“Our view is that unless membership of the default agreement is enforced by Ofcom then there is no point in having a default agreement, and the industry should be left to negotiate its own bilateral arrangements and prices,” said Royal Mail.

Royal Mail said it would be writing to other postal operators once the latest amendment was made to the PCOPA, and that if those firms do not sign the agreement it would demand that Ofcom take enforcement action.

Source: Post&Parcel/Ofcom

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