Conclusions and recommendations
1. Postcomm's
new quality of service regime does not target delivery
and collection times nor items of mail lost by Royal Mail. Complaints
data show these aspects of performance concern consumers. Postcomm
should impose specific targets or financial penalties where it
identifies persistent problems for consumers as a result of poor
collection and delivery performance.
2. Royal Mail's schemes to compensate for
the 15 million items of mail a year which are lost, stolen or
damaged do not offer adequate protection for consumers. Compensation
schemes are complex and hard for consumers to understand. Postcomm
should improve consumer protection by introducing simpler schemes
which are easier for the consumer to understand and use.
3. Postcomm does
not have information on the cost to Royal Mail of improving or
relaxing its quality of service targets. Without this information
Postcomm cannot be sure it is setting the appropriate targets
or financial incentives. Postcomm should obtain this information
before it starts planning for the 2010 price control.
4. Certain postcode
areas, particularly in London, experience consistently worse levels
of services than others. Postcomm should research why some postcode
areas persistently experience the lowest levels of service and
press Royal Mail to develop a strategy for addressing these chronic
problems over the current price control period.
5. Postcomm's investigation
into Royal Mail's performance in 2003-04 lasted more than 12 months,
longer than the legal time limit. Postcomm should set out clear
criteria for judging and investigating poor performance by Royal
Mail so that the investigative process becomes more streamlined
and decisions can be taken within a shorter time frame.
6. In 2003-2004,
Postcomm did not fine Royal Mail for missing all its targets,
but in 2002-2003, it imposed a fine of £7.5 million for missing
only two targets. Postcomm needs to take a consistent and accurate
approach to its imposition of financial penalties on Royal Mail
and it should evaluate the effects of these fines on Royal Mail's
behaviour to determine if they are effective in encouraging improved
performance.
7. Royal Mail still
accounts for around 97% of mail volumes in the regulated area.
Competition has developed mostly through 'access' agreements,
whereby Royal Mail signs commercial agreements to deliver post
that has been collected and sorted by other companies. Postcomm
should investigate whether the current arrangements
for the access area of the market need to be changed in order
to prevent Royal Mail from using its dominant position to hinder
the development of competition.
8. Competition can
lead to higher quality of service for consumers but could also
conflict with consumer interests, for example if it threatens
the universal service at a uniform tariff. At present, Postcomm
largely relies on Royal Mail for notification of conflicts between
competition and the interests of consumers. Postcomm should develop
its independent analysis of the level and effects of competition
on the UK postal market and identify and mitigate potential conflicts.
| 
