Royal Mail forced to pay £70m to customers for failing to deliver

Royal Mail will be ordered this week to pay a record £70m to its customers as compensation for the severe deterioration in its service.

Royal Mail will be ordered this week to pay a record £70m to its customers as compensation for the severe deterioration in its service.

Postcomm, the regulator, is expected to deliver the punishment tomorrow or on Tuesday, wiping nearly a third off Royal Mail's operating profits.

Postcomm declined to comment, but it is understood that the regulator decided on the compensation package after Royal Mail missed all 15 of its performance targets last year.

Customers in parts of London have seen their postal service virtually collapse as Royal Mail has tried to make its systems more efficient. And postal services were severely disrupted by the unofficial strike last year.

Under a Postcomm scheme introduced in January, business and domestic customers can claim compensation in cash and postage stamps.

Royal Mail was fined £7.5m last year after missing 12 service targets.

The company may appeal against Postcomm's ruling. Royal Mail is in the second year of a three-year renewal programme that has already led to 13,000 redundancies. The state-owned company aims to make at least £400m in operating profits in its next financial year.

However, in a recent presentation to Postcomm executives, Royal Mail chief executive Adam Crozier said that meeting the targets would be a "major challenge".

A Royal Mail spokesman said: "Postcomm will need to take into account whether the financial penalty is in the best interests of customers."