Missing post costs Royal Mail £11.7m

Postal services watchdog, Postcomm, is proposing to fine Royal Mail £11.7m over "serious breaches" of its licence obligations to protect the mail and deliver it on time.

Launched in 2004, the Postcomm review found that important features of Royal Mail's procedures were not being applied across the business. The regulator noted that the most significant weakness was the poor management of the recruitment and training process for non-contract staff.

In addition the framework and information systems that Royal Mail had put in place to prevent the loss, theft or damage of mail were not operating effectively. These weaknesses "significantly reduced the company's ability to protect customers' mail," said Postcomm.

Postcomm Chairman Nigel Stapleton said: "A regulator's first duty is to protect the interests of customers. Customers are entitled to expect that when they post mail it will reach its destination. But during 2004/05, around 14.6 million letters, packets and parcels in Royal Mail's care were lost, stolen, damaged or interfered with.

"A Postcomm review uncovered some serious shortcomings during 2004/05 in Royal Mail's application of its procedures for properly protecting the mail - what we call mail integrity."

Royal Mail, which faces a £11.38 million fine for a failure to meet its obligations to protect the mail; and £270,000 fine for poor mail delivery performance across three London postcode areas, described the fines as "unreasonable."

However, Postcomm said it was encouraged that Royal Mail appeared to have improved substantially its performance in both these areas of licence breach and had reduced the proposed penalty by 20%.

The regulatory body said it would continue to monitor the company to ensure that these improvements are maintained.

Under the terms of the Postal Services Act 2000, Royal Mail has an opportunity to make representations to Postcomm on the proposed penalties.

(SP/KMcA)