UK Royal Mail announces customer compensation scheme

Royal Mail has introduced new compensation arrangements for customers.

The new compensation scheme gives customers 12 times the cost of First Class postage for First Class letters that arrive more than four working days after posting and for Second Class letters that arrive more than six working days after posting.

Customers will be given £3.36 worth of postage in a book of First Class stamps.

Business customers will get refunds on their postage bills if Royal Mail does not meet regulatory performance targets.

Royal Mail’s move is in line with today’s (October 7) determination by the industry regulator Postcomm that will see the start of a mandatory scheme for Royal Mail customers from January 1 next year.

Royal Mail Chief Executive Adam Crozier said: “The new arrangements we’ve started meet almost all of the requirements in Postcomm’s determination on compensation so our customers will get early benefit.

“Royal Mail is offering customers the fairest postal compensation scheme in the world – one of the very few to pay compensation for delay. It’s better than compensation schemes offered by our competitors and other service industries.

“We’d rather get the service right first time than pay compensation. But with more than 82 million letters a day sometimes things go wrong and if they do we want to compensate customers quickly and fairly.”

The new compensation arrangements could cost Royal Mail an estimated £48 million a year, a significant increase over the current £15 million a year.

Mr Crozier said: “It is right that customers get fairly compensated if we let them down. But with Royal Mail’s high volumes this will translate into a lot of money.

“Service failure now means heavy fines and compensation costs. Our priority is to improve services – that’s the only way we can drive down these costs and reward our people.”

The key points of the new compensation arrangements, introduced from this week (from October 6) are:

· Standard compensation will be a book of 12 First Class stamps (£3.36 worth of postage) for First Class letters that arrive more than four working days after posting, for Second Class letters that arrive more than six working days after posting and for standard parcels that arrive after more than ten working days. Customers will need to provide evidence of delay.
· Business customers will receive 0.1 per cent refund (up to a maximum of five per cent) on their postage bills for each 0.1 per cent that Royal Mail is below targeted performance on relevant services, subject to a minimum failure of one per cent and a maximum payout of five per cent. This will be payable, as appropriate, for the whole of financial year (03/04).

From January 1 2004

· In exceptional circumstances and with additional evidence customers can claim £5 for delays as above.
· For First Class letters that arrive more than ten working days after posting and for Second Class mail and standard parcels that arrive after more 12 working days customers will be able claim £10. Again, this will only apply in exceptional circumstances when customers provide additional evidence.
· Additional compensation will also be available for Royal Mail’s Special Delivery Next Day service. Customers will receive £5 compensation if their item is not delivered on the guaranteed day and £10 if it arrives 7 working days or more after the guaranteed day. This is in addition to the current compensation for the service which is a refund of the postage costs. Royal Mail’s Special Delivery services already include additional loss and consequential loss compensation options for customers to buy.

For claims of lost mail current compensation arrangements are continuing with customers receiving up to £28, 100 times the cost of basic First Class postage on evidence of market value. Minimum compensation for stamped and metered mail and standard parcels has now been introduced (from October 6), 12 times the price of a First Class stamp (£3.36). Customers requiring additional compensation cover have a range of Special Delivery service options, with consequential loss compensation available up to £10,000.