It’s a regulatory roll over! Comment from UK Postwatch

In 2003/04 Royal Mail famously failed every one of its 15 minimum performance targets. These targets were set by Postcomm on advice from Postwatch and included in Royal Mail’s licence.

Yet despite this worst ever performance the Regulator has decided after 12 months of deliberation not to fine Royal Mail. Postwatch believes the regulator has rolled over. Customers have suffered; Royal Mail has got off scot-free.

The regulator is hiding behind £60 million of compensation, which customers were separately entitled to. In May 2004 Postcomm predicted that compensation to bulk mailers alone could reach £80 million. In practice, only £43 million has been paid due to ‘loopholes’ in the scheme written by Postcomm. Customers have been short changed by more than £30 million.

Peter Carr, commenting on Postcomm’s announcement of no action said: “This is a bad day for customers and a missed opportunity.

“In 2003/04 Royal Mail failed its customers by missing all of its minimum performance targets. It is likely it will miss most of them again this year. Yet despite this we have a regulator that has allowed prices to rise and is now unwilling to take any enforcement action in support of its own licence.

“The reasons given for the lack of action are spurious. The bottom line is that customers paid for services they did not receive. The regulator has watched and done nothing to redress the unfairness of that fact. It must expect Royal Mail will now treat the licence as a list of ‘take it or leave it’ options rather than as a legal obligation to protect the public interest.

“When Postcomm was led by Graham Corbett it imposed a £7.5 million fine on Royal Mail for failing just two of its service targets. These same targets were failed by an even greater margin last year – yet no penalty is imposed. This inconsistency comes despite Nigel Stapleton saying in May 2004:

“If we consider it justified, we will not hesitate to impose financial penalties; …… 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 are improved.”

“Fine words from Postcomm but will they ever be believed again? Royal Mail can’t turn in a worse performance than failing all of its 15 targets. Customers are left wondering what would trigger action by this regulator?

MORE INFORMATION

Contact Andy Frewin on 020 7259 1223 or 079 00263 004

NOTES TO EDITORS

1. Postwatch are predicting that for 2004/05 Royal Mail is likely to fail 12 of its performance targets, including that for 1st class mail.

2. Royal Mail’s price rises. May 2003 1p on 1st and 2nd class: April 2004 1p on 2nd class: 7 April 2005 2p on 1st class bringing it up to 30p.

3. The two targets Royal Mail failed in 2002/03, prompting Postcomm to impose a £7.5m penalty, were First Class Post Paid Impression and First Class Response Services. The performance of both of these services worsened in the following year, from 6 per cent below the target to 7.1 per cent and 8.6 per cent respectively.

4. Postwatch’s website is www.postwatch.co.uk