Postcomm to probe UK Royal Mail’s serious service quality failings

Postcomm on 27 May 2004 launched an investigation into the reasons for the recent collapse in Royal Mail’s quality of service which could cost the company around GBP80 million in compensation to business customers, in addition to any penalties that Postcomm might impose.

This follows Royal Mail’s announcement that it has substantially increased its profits in the year to 31 March 2004, but at the same time the service to its customers has fallen significantly across the board.

Nigel Stapleton, chairman of Postcomm said:

“While it is pleasing to see Royal Mail’s improved financial results, it is essential that these should not have been achieved by any loss of focus on customer service quality.

“Postcomm will be taking action to satisfy itself that all reasonable endeavours were made to meet the required service standards, and continue to be made. If we consider it justified, we will not hesitate to impose financial penalties; last year Postcomm fined Royal Mail a record GBP7.5 million following far less extensive service failures in 2002/03. We may also make an enforcement order if we believe further steps still need to be taken by Royal Mail to ensure that current service standards – which we believe are still well below their targets — are improved.

“We do not doubt the commitment of the vast majority of the Royal Mail workforce, and we look forward to full cooperation from Royal Mail while we undertake our enquiries. We expect to announce our conclusions in September after obtaining a full and balanced picture across the whole of Royal Mail’s operation.”

Notes
Royal Mail today revealed that it had failed all 15 of its annual service quality targets. After a good performance in the first half of the year, customer service was hit first by strikes, and then by the simultaneous introduction of a number of major change programmes. Royal Mail also suffered a serious fire at one of its major mail centres

The service quality targets relate to performance against each of Royal Mail’s mail services as outlined in its licence

This year, for the first time, a compensation scheme, introduced by Postcomm in October 2003, came into operation. Business users can expect a 1% reduction in their postal bills for each 1% Royal Mail falls below the national target. The scheme operates between the ranges of 1% and 5% and is backdated to April 2003.

A retail compensation scheme was introduced in January 2004 for domestic mail. Royal Mail is required to compensate customers if it does not deliver first class post within three working days. Compensation can be claimed in the event of a delay.

Postcomm’s Commissioners can also impose a financial penalty on Royal Mail if they consider the company has not used all reasonable endeavours to achieve the service targets in its licence. Before reaching a decision they will need to take account of all evidence provided by Royal Mail, and representations made by Postwatch, the consumer body.

Royal Mail operates over 70 mail centres and uses more than 1,400 delivery offices for its UK mail operations, which employ around 160,000 people.

A background document on Quality of Service issues is on the Postcomm website, under Latest News.

Postcomm – the Postal Services Commission – is an independent regulator. It has been set up to further the interests of users of postal services. Postcomm’s main tasks are to:

• Seek to ensure a universal postal service at an affordable uniform tariff
• Further the interests of users wherever appropriate through competition
• License postal operators
• Control Royal Mail’s prices and quality of service
• Give advice to government on the future of the post office network.

Postcomm’s policies are steered by a board of eight commissioners, headed by the chairman, Nigel Stapleton.