Royal Mail fined £21m by Ofcom for missing delivery targets

Royal Mail has been fined £21m for missing its annual delivery targets for first- and second-class mail, leading to millions of letters arriving late across the UK, according to the regulator Ofcom.

This is the third time the 509-year-old postal service has been fined by the communications watchdog, and the third-biggest financial penalty Ofcom has ever issued to any company.

Royal Mail delivered 77% of first class-mail and 92.5% of second-class mail on time during the 2024-25 financial year, Ofcom found. This was “well short” of its targets of 93% and 98.5%, the regulator said after a six-month investigation.

It told Royal Mail it must urgently publish – and deliver – a credible improvement plan, or fines were likely to continue. While the company produced a plan for the last year, there was no improvement, Ofcom said, calling this “unacceptable”.

The company has long struggled to deliver mail on time. It has been fined more than £16m over the past two years for failing to meet targets, and Ofcom began its investigation in May.

In April the Czech billionaire Daniel Křetínský completed a drawn-out £3.6bn purchase of Royal Mail’s owner, International Distribution Services (IDS), after the takeover was approved by a UK government national security review.

That same month, the price of a first-class stamp rose again, up 5p to £1.70, while the cost of the second-class service rose by 2p to 87p.

Ian Strawhorne, Ofcom’s director of enforcement, said: “Millions of important letters are arriving late, and people aren’t getting what they pay for when they buy a stamp.

“These persistent failures are unacceptable, and customers expect and deserve better. Royal Mail must rebuild consumers’ confidence as a matter of urgency. And that means making actual significant improvements, not more empty promises.”

The company was required to deliver 93% of first-class mail within one working day of collection and 98.5% of second-class mail within three working days. Ofcom said it took any exceptional circumstances such as extreme weather into account.

The regulator said: “The company breached its obligations by failing to provide an acceptable level of service without justification. It took insufficient and ineffective steps to try and prevent this failure, which is likely to have impacted millions of customers who did not get the service they paid for.”

The penalty was reduced by 30% from £30m because Royal Mail admitted liability and agreed to settle the case.

Ofcom gave IDS permission in July to end second-class post on Saturdays and reduce the service to alternating weekdays from Monday to Friday. But this would take “many months” to roll out, the company said in September when it reported its first annual profit for three years – the first financial results since the takeover.

Křetínský, known as the Czech Sphinx, owns a collection of businesses including energy assets, as well as stakes in Sainsbury’s and West Ham United.

The postal service was created in 1516 during the reign of Henry VIII.