Royal Mail has escaped a fine for poor quality service, despite missing all of its 15 targets last year. Postcomm, the regulator, said Royal Mail had handled two serious disruptions in 2003 - a fire at a big sorting office and a series of unofficial strikes - as well as could be expected. However, the restructuring of its transport network in 2004 was not well managed, causing problems with mail deliveries in the fourth quarter of the financial year. But Nigel Stapleton, Postcomm chairman, said that fining Royal Mail would not help customers but just channel money to the government, Royal Mail's owner.

Royal Mail has paid out £43m in compensation to customers for missed service targets and also agreed to charge customers £17m less in the 2004-05 financial year. Mr Stapleton said focusing on the compensation scheme rather than fines was better for customers. Rebecca Bream