Royal Mail is facing a formal investigation by the UK communications regulator after the postal service admitted that almost a fifth of first-class deliveries arrived at least a day late in the year to April.
Ofcom said it would look into Royal Mail’s “failure to meet its delivery targets during the past year” and whether the company was meeting its obligations.
Shares in Royal Mail Group, a member of the FTSE 100, were down 4% by Tuesday afternoon.
Royal Mail Group has been owned by investors since it was privatised in 2013, in a deal that was criticised as selling it off too cheaply.
However, it still has to meet regulatory requirements as a vital part of the UK’s communications system, including targets for delivering letters on time and at the same price across the country.
Ofcom highlighted that only 81.8% of first-class mail was delivered within one working day and 95.4% of second-class mail was delivered within three working days, missing the respective targets of 93% and 98.5%. Those targets also exclude the Christmas period, when Royal Mail has often struggled with higher seasonal volumes.
Royal Mail’s admission this month that it missed the targets came weeks after it raised the prices of stamps amid broader inflationary pressures on households and the cost of living crisis. First-class stamps increased by 10p to 95p, while second-class stamps rose by 2p to 68p.
The regulator said: “Ofcom takes quality of service very seriously. In our investigation we will gather evidence to understand the reasons behind this lapse in performance, and will determine whether Royal Mail has breached its requirements.”
A Royal Mail spokesperson apologised to customers hit by service issues, but blamed the coronavirus pandemic for putting “significant strain on our network”.
In a statement, the company said 15,000 workers were sick or self-isolating in January this year at the peak of the most recent wave of infections. It also flagged “significant changes to our operation to deal with the record levels of parcels being delivered during the pandemic and successive lockdowns”.
The spokesperson added: “Service levels have improved considerably since the start of the pandemic, and we have taken a number of steps to improve quality of service, including recruiting additional temporary staff and establishing a specialised dedicated delivery taskforce. However, we acknowledge there is more work to do to return to our normal levels of service everywhere.”
