Ofcom concludes Royal Mail review; to retain UK postal rules

UK communications watchdog Ofcom has concluded a review into Royal Mail, finding an improvement in the postal company’s financial performance over the last three years.

Having introduced a new framework for the universal postal service in 2012, Ofcom said the measures – which include capping the cost of a second class stamp – “are generally working well for people and businesses who use the post”.

The framework will now stay in place until 2022, with the regulator saying it would not impose new price controls on Royal Mail on the back of its improving financial performance.

Ofcom found that although Royal Mail’s profit margins last year were at the lower end of a 5-10 per cent target range, they remained “consistent with a sustainable universal service”.

Still, the prospect of fines for missed delivery targets remains. Royal Mail avoided a fine last October for missing quality of service standards in first class mail in 2015.

Jonathan Oxley, Ofcom competition director, said:

We know people value the universal postal service and we will continue to ensure that it remains effective. Our review has shown that current rules are generally working well for companies and households.

Royal Mail still has room to improve. So we’ll keep a very close eye on all aspects of the company’s performance, and step in if we need to protect consumers from high prices.