Conditions imposed on postal operators
The Postal Services Act 2011 (“the Act”) replaced the previous licensing regime with a general authorisation regime. This means that operators may provide postal services without the need for any licence or prior authorisation by Ofcom. Ofcom has powers to impose the following types of regulatory conditions under the Act:
- Designated universal service provider (DUSP) conditions (s36-37 of the Act)
- Universal service provider access conditions (s38 and Schedule 3)
- Universal service provider accounting conditions (s39)
- Notification conditions (s41)
- General universal service conditions (GUSC) (S42)
- Essential conditions (s49)
- General access condition (s50 and Schedule 3)
- Consumer protection conditions (s51-52)
Ofcom put a new regulatory framework in place in March 2012 and has made some additional changes to conditions and new conditions after this date. These conditions are available on the links below.
Designated universal service provider (DUSP) conditions
Ofcom may impose a DUSP condition on a universal service provider and may, in summary, require it do one or more of the following:
- Provide a universal service or part of a universal service in the UK to specified standards;
- Provide access points for the universal postal service to a certain specification;
- Provide information to postal operators and users about universal services; and
- Anything else that Ofcom considers appropriate in relation to any of these obligations.
In particular, a DUSP condition can be used to set some limits on universal service prices and/or impose performance targets.
In the March 2012 regulatory framework Ofcom designated Royal Mail as the universal service provider in the UK and imposed a number of DUSP conditions on Royal Mail.
Following our Review of the Second Class safeguard caps 2019, on 1 April 2019 two new safeguard caps will enter into force superseding DUSP Condition 2 and DUSP Condition 3 currently in operation:
DUSP Condition 2 – Safeguard cap price control for Second Class standard letters (in force from 1 April 2019) (PDF, 225.0 KB)
DUSP Condition 3 – Safeguard cap price control for Second Class large letters and small and medium parcels up to 2kg (in force from 1 April 2019) (PDF, 278.2 KB)
Universal service provider access conditions
Ofcom may impose a USP access condition on a universal service provider. A USP access condition is a condition requiring the provider to do either or both of the following:
- Give access to its postal network to other postal operators or users of postal services, and
- Maintain a separation for accounting purposes between such different matters relating to access (including proposed or potential access) to its postal network as OFCOM may direct.
This can include a control on prices for access services.
In March 2012 Ofcom imposed USP access conditions on Royal Mail in relation to the provision of D+2 and later than D+2 services at the Inward Mail Centre.
In November 2018 Royal Mail wrote to Ofcom providing reasons for a different implementation date for the New USP Access Condition. Having carefully considered the issues, we have decided to provide Royal Mail with a short extension to come into compliance with the New USPA Condition.
Universal service provider accounting conditions
Ofcom may impose a USP accounting condition on a universal service provider. A USP accounting condition can require the universal service provider to do one or more of the following:
- to maintain a separation for accounting purposes between different matters as directed by Ofcom;
- to comply with cost identification and orientation rules made by Ofcom;
- to comply with rules set by Ofcom about the use of cost accounting systems; and
- to secure that its compliance with those systems is audited annually by an independent auditor.
Ofcom has imposed USP accounting conditions on Royal Mail. This includes requirements in relation to accounting separation, costing methodologies and reporting. In addition, we have also imposed Regulatory Accounting Guidelines (RAG).
Ofcom may impose a notification condition on any postal operator who is providing, or intending to provide, a service within the scope of the universal service. This condition requires operators to give Ofcom advance notice of their intention to commence or expand letter delivery operations.
Following a direction from the Secretary of State, Ofcom imposed a Notification Condition on operators requiring them to notify it three months in advance if they are intending to enter or expand letter delivery operations. This condition only applies to operators intending to provide new or additional letter delivery services of a certain scale (2.5 million items per quarter).
General universal service conditions
Ofcom has the power to impose a general universal service condition (GUSC) on postal operators that provide services within the scope of the universal service.
GUSCs are generally applicable to all relevant postal operators (i.e. they are not specifically attached to an individual operator), however, they could be designed to only apply to operators of a specified description (for example, operators that have reached a minimum scale or provide a certain type of service).
A GUSC may contain obligations that Ofcom considers are necessary to impose for or in connection with securing the provision of a universal postal service. A GUSC may also, in certain circumstances, require postal operators to make contributions for meeting the financial burden of the provision of a universal postal service.
A GUSC cannot replicate the requirements of the universal service i.e. they may not require a person to:
- Deliver or collect letters six days per week (packets five days per week);
- Provide a service throughout the UK; or
- Provide a service at an affordable price which is uniform throughout the UK.
To date, Ofcom has not imposed any general universal service conditions.
Ofcom may impose an essential condition on every postal operator, or every postal operator of a description specified in the condition.
An essential condition may contain obligations that Ofcom considers necessary to impose to:
- safeguard confidentiality in connection with the sending, conveyance and delivery of letters;
- safeguard security where dangerous goods are transported;
- safeguard the confidentiality of information conveyed;
- guard against the theft, loss or damage to postal packets, and
- secure the delivery of postal packets to the intended addressees.
Ofcom imposed an essential condition on all regulated postal operators (RPOs) in March 2012 requiring them to comply with the Mail Integrity Code of Practice (MICOP). The MICOP intends to minimise the potential for postal packets to be subject to loss, theft, damage or interference.
General access condition
Ofcom may also impose a general access condition on a particular postal operator or operators requiring them to:
- give access to other postal operators, or users of postal services, to the operator’s postal infrastructure or any service within the scope of the universal postal service which it provides; and/or
- maintain a separation for accounting purposes between their retail and access operations as directed by Ofcom.
To date, Ofcom has not imposed any general access conditions.
Consumer protection conditions
Ofcom may impose a consumer protection condition on postal operators (or postal operators of a specified description) requiring them to do one or more of the following:
- assume liability in respect of specified loss of or damage to certain postal packets;
- establish and maintain procedures, standards and policies with respect to consumer protection matters, and
- make payments relating to qualifying consumer expenses of Citizens Advice and Citizens Advice Scotland.
Ofcom imposed a number of consumer protection conditions in March 2012 some of which have been updated since.
Following the publication of our Review of consumer advocacy costs in January 2019, on 1 April 2019 a new Consumer Protection Condition 1 (CPC1) will enter into force, superseding the previous CPC1 (as published on 4 December 2015).
Consumer Protection Condition 1 – Payments relating to qualifying consumer expenses of the National Consumer Council, Citizens Advice or Citizens Advice Scotland (valid from 4 December 2015 until 31 March 2019) (PDF, 92.1 KB)
Consumer Protection Condition 1 – Payments relating to qualifying consumer expenses of the National Consumer Council, Citizens Advice or Citizens Advice Scotland (valid from 1 April 2019) (PDF, 292.0 KB)