Postcomm: Compensation consultation on delay, loss and damage – second stage

Postcomm issued a consultation in November 2006 asking for views on a number of key issues in relation to the current compensation arrangements for postal packets that have been lost, damaged or delayed.

Royal Mail’s license requires it to have a “standards of service compensation scheme” for compensating users of postal services for delayed mail.

The second stage of this review has now been published, and Postcomm have provided a list of their proposals for both retail and bulk mail compensation.

The key proposals for the retail schemes for delay and for loss and damage are as follows:

• where the item was posted with Royal Mail, there will be compensation (a minimum of a book of 6 x 1st class letter stamps) for first time claimants for loss, damage and delay where an item has no intrinsic value or where a claimant cannot provide proof of posting;

• loss and damage to items with an intrinsic value, with proof of posting with Royal Mail and proof of value, will entitle customers to a postage refund (a minimum of a book of 6 x 1st class stamps) plus compensation for actual loss up to a maximum of the market value of the item or 100 x 1st class letter stamp at the first weight step1, whichever is the lower;

• the GBP 5 and GBP 10 payments for delay and substantial delay will be removed, except for Special Delivery Next Day. The substantial delay category will be removed for non-Special Delivery items;

• compensation for delayed retail mail will become payable one day earlier than at present, i.e. 3 working days after the due date;

• redirected mail will be eligible for compensation for delay; and

• users of the Articles for the Blind service will be able to claim compensation for loss, damage and delay.

The current compensation scheme for delay, as determined by Postcomm in October 2003, includes compensation arrangements for senders of mail using bulk mail services. Bulk mail customers currently receive compensation in the form of an annual rebate of a percentage of the money they have paid to Royal Mail, depending on Royal Mail’s annual performance against its quality of service targets for bulk mail.

Postcomm proposes to remove bulk mail from the compensation scheme for delay with effect from 1 April 2009. Postcomm considers that the continuation of a regulated compensation scheme for bulk mail may distort customer behaviour and act as a barrier to switching.

The Access Agreements sets a “Service Standard” of 95 pct for next day delivery for the conveyance and delivery of access mail by Royal Mail. If Royal Mail were to introduce its own bulk compensation scheme for customers who use its bulk mail products but who do not have a Downstream Access Agreement, it would have to ensure that it did not show those customers undue preference compared to customers or operators with an Access Agreement. It would also have to ensure that it did not unduly discriminate against any type of customer or access operator. Postcomm considers that this will be an incentive for Royal Mail to develop an Access compensation scheme if it develops one for customers who do not use Access.

The closing date for this consultation is 18 February 2008.

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