Royal Mail avoids new pricing rules as Ofcom gives universal postal service a clean bill of health
Royal Mail has avoided having new pricing rules imposed on it, after the communications regulator said the universal postal service had "returned to financial health".
In a report released today, Ofcom said after "modernisations", Royal Mail had pushed its return on sales up to the "lower end of the 5-10 per cent range which [we consider] to be compatible with a universal service".
It added that until the last financial year, Royal Mail's return on sales was "below this range".
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Overall, though, the news appeared to be good: consumer satisfaction is up (in spite of rises to stamp prices) and there is more competition in the market, although chief executive Moya Greene has complained about it.
But Ofcom did say it proposed to impose new rules regarding so-called untracked letters, which include medical letters, bank statements and birthday cards, concerning the amount of care postal operators must put into looking after them – with those who fail to deliver letters safely facing fines.
And it added it will "tighten" rules around the access market, where rival operators collect and sort mail before handing it over to Royal Mail to deliver, to prevent the company from imposing shorter notice periods around contractual terms on its operators.
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The review concludes at the start of August, Ofcom added.
Royal Mail's response was pithy: "[We are] reviewing the proposals and will issue a further announcement in due course".
The news was clearly heartening to investors: shares were up two per cent at 531.5p in early trading.