Royal Mail is fined £21m for 'unacceptable' service after missing both first and second class delivery targets for the third year in a row

Royal Mail has been fined £21million for missing its latest annual first and second class mail delivery targets - leading to millions of letters arriving late across Britain.

Communications watchdog Ofcom confirmed today that it has now found the company in breach of its regulatory obligations for three years in a row.

The latest fine represents the third-largest penalty ever imposed by Ofcom and follows fines of £5.6million in November 2023 and £10.5million in December 2024.

In the latest 2024/25 year, Ofcom said that 'even after accounting for exceptional weather events', Royal Mail only delivered 77 per cent of first class mail on time and 92.5 per cent of Second Class mail on time between April 2024 and March 2025.

Its nationwide annual delivery targets for that period were that Royal Mail should deliver 93 per cent of first class mail within one working day of collection and 98.5 per cent of second class mail within three working days.

The regulator has therefore decided that the company breached its obligations by 'failing to provide an acceptable level of service without justification'.

Royal Mail 'took insufficient and ineffective steps to try and prevent this failure', which likely impacted 'millions of customers who did not get the service they paid for'.

Ofcom has therefore fined Royal Mail £21million, which will be passed to the Treasury. This includes a 30 per cent reduction from the £30million it would have imposed, which it said reflected Royal Mail's admissions of liability and agreement to settle.

Ofcom said it also 'considered the harm suffered by customers as a result of Royal Mail's poor service' and that it had breached obligations for three consecutive years.

But the regulator added it has a duty to ensure the service is financially sustainable, so it considered Royal Mail's financial position, including profitability and cash flow.

Ofcom director of enforcement Ian Strawhorne 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.

'We've told the company to publicly set out how it's going to deliver this change, and we expect to start seeing meaningful progress soon. If this doesn't happen, fines are likely to continue.'

Ofcom said Royal Mail produced an improvement plan for 2024/25, aiming to achieve 85 per cent for first class mail and 97 per cent for second class by March 2025, which would have been a 'significant improvement' – 'however, this has not materialised'.

The regulator said this was 'unacceptable' and it had told Royal Mail to 'urgently publish and implement a credible plan that delivers significant and continuous improvement'.

Without this, Ofcom said it was likely to continue to see fines as 'both necessary and appropriate'.

The regulator also made changes in July to the obligations imposed on Royal Mail, which aim to 'reflect what people need, put the service on a more sustainable footing, and enable the company to invest more in improving its delivery performance'.

If Royal Mail misses its annual targets, Ofcom can consider evidence of any 'exceptional circumstances' beyond the company's control such as extreme weather.

Exceptional events the regulator considered in the most recent period were two Met Office red weather warnings – Storm Darragh on December 6 and 7, 2024 and Storm Eowyn on January 24, 2025.

The 'Christmas period' is also excluded from targets, which is the period beginning on the first Monday in December and ending on the New Year public holiday in the following January.

Ofcom also set Royal Mail new enforceable 'backstop' targets so that 99 per cent of mail has to be delivered no more than two days late. This aims to address how many people have seen letters taking weeks to arrive.

Ofcom did not find Royal Mail in breach of its regulatory obligations in 2019/20, 2020/21 and 2021/22, due to the impact of the pandemic on operations.

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In 2022/23 Royal Mail made a loss of £419million, in 2023/24 it made a loss of £348million, and in 2024/25 it returned to a profit of £12million.

A Royal Mail spokesperson said today: 'We acknowledge the decision made by Ofcom today and we will continue to work hard to deliver further sustained improvements to our quality of service.

'A key area of focus and investment has been the detailed work ahead of full implementation of our new delivery model, enabled by Ofcom's changes to the universal service.

'This is critical to enable us to drive a step change in quality of service.

'We have also implemented important changes across our network including recruiting, retaining and training our people, and providing additional support to delivery offices.

'Where we have piloted universal service changes, we can see that our model is working, with improvements in deliveries. This will help us deliver a modern, reliable and more financially sustainable postal service that meets the needs of today's postal users.'