Royal Mail has asked Postcomm if it can suspend its bulk compensation scheme and adjust the C-factor for another year. These arrangements were first made for 2007/08 because industrial action made it difficult for Royal Mail to meet its quality of service targets, which would have triggered compensation payments to bulk mailers and reductions in future revenue. It now wants to repeat the scheme in 2008/09.

Postcomm today published a consultation letter which seeks stakeholders' views on Royal Mail’s request, which it has made on the basis that there may be further industrial action in the future. 

Stakeholders are invited to respond to the letter by the 27 June 2008. We expect to make a decision by the end of July 2008.  

As well as being liable for compensation payments, poor quality of service affects Royal Mail’s income for the following year under a section of Postcomm’s price control known as the ‘C’ factor. For 2007/08 Royal Mail estimated that if the bulk mail compensation scheme was not suspended it could have cost the company £300 million.