Royal Mail fines made company millions

Royal Mail’s income from penalty charges rose by 50% after it altered its pricing system four years ago. Since changing the way it charged for mail in August 2006 – which is now based on sizing – the postal organisation charged millions of customers for a £1 administration fee for underpaid postage.

Royal Mail released the statistics following a Freedom of Information request from the Daily Mail.

The company said that penalty charges rose 50% to almost £15m in 2007/8, followed by another rise to £16.5m the following year. This later dropped to £13.7m in 2008/9, as customers became more accustomed to the new ruling.

A Royal Mail spokesman told the Daily Mail: “Royal Mail does not make a profit from the administration fee involved in the collection of underpaid mail as the fee simply reflects the extra work involved.

“If there was no system to collect unpaid postage, it is very likely the current tiny fraction of mail with no or underpaid postage on it would increase significantly – at a cost to all other customers who pay the correct postage.”