Royal Mail faces £8m fine for poor business service

Royal Mail faces multi-million-pound fines unless it dramatically improves two business mail services, it emerged yesterday.

The industry regulator Postcomm placed an enforcement order on Royal Mail, requiring it to improve the two services by the end of March or face a fine of around pounds 8m.

The move, souring even further the bitter relations between the two, came as the regulator awarded the first long-term licences to provide a rival business service to Royal Mail’s, to Hays and Dutch post group TPG.

Postcomm said Royal Mail had been unable to convince it that procedures to improve the quality of first class response service and first class postage paid impression (PPI) were being applied throughout the business.

In November, the response service stood at 76.2% of next-day deliveries against a target of 92.5% while PPI was at 83.3% against the same target. Even with the improved procedures, the PPI service is known to have deteriorated.

Royal Mail, which admits that the services are “nowhere good enough,” said it was “dis appointed” by Postcomm’s decision even as the regulator tried to avoid another confrontation by suggesting the fines could be avoided.

“We think Royal Mail can get a good deal closer to the target and they now have to report to us each month on progress. They are anxious to avoid any penalty and we don’t want to impose one,” sources said.

Welcoming the move, the chairman of consumer body Postwatch, Peter Carr, said: “We hope that this will give Royal Mail the incentive to make dramatic efforts to improve these services for their customers. . .The gap between targets for these services and their actual performance is wider this year than last.”

Postcomm, meanwhile, substantially boosted competition in postal services by awarding seven-year licences to Hays and TPG to carry bulk mail and to provide other services to businesses from January 1. From then, 30% of the market will be liberalised.

Hays, which carries one million items of mail each day for 30,000 customers, and TPG are targeting large companies, publishers, mailing houses and direct marketers – sending more than 4,000 items for delivery in one batch.(R)

(c) The Guardian