On 8 December 2025, following a customer workshop and a formal consultation with Access customers, we issued our decision in respect of our proposals to change the quality and compensation provisions within the Access Letters Contract, specifically:

1. Changes to the Access D+2 Service Standard and Compensation Targets; and
2. Introduction of Access reliability standards, compensation targets and a corresponding compensation regime (for D+2, D+3 and D+5).

We carefully considered our proposals in light of all customer comments and this significantly influenced the decisions on the proposals, including moving on the reliability compensation threshold, the D+2 compensation rate, and the implementation timelines for the reliability compensation mechanism taking effect.

In response to our decision we received further comments from three Access customers disagreeing with three particular aspects of our decision, namely:

1. Reliability compensation rate: Our decision was to introduce reliability compensation at a rate of 1 pence per item. All three customers felt that this rate was set too low primarily because it does not provide enough incentivisation for the Royal Mail operation to prioritise service recovery to meet the reliability targets.

2. D+2 compensation rate: Royal Mail’s original consultation proposal was to maintain the current approach of having the same Band 1 and Band 2 rates apply to each of the D+2, D+3 and D+5 service standards. Having carefully considered the feedback received from customers both through the workshop and the formal consultation, we decided to create separate D+2 compensation rates at 3p for Band 1 (compared to 1.990p for D+3 and D+5) and 6.6p for Band 2 (compared to 4.264p for D+3 and D+5). Despite our move from the original consultation proposal, the three customers felt that the D+2 rate should be considerably higher to reflect the delta between the D+2 price and the D+3 price.

3. Overall £11m annual compensation cap: Royal Mail has been consistent in its position that it is not changing the £11m compensation cap which it agreed with Access customers in 2023, and we made no consultation proposals to that effect. Despite this, one customer has suggested that we should either increase the cap to a fixed figure or build into the ALC a mechanism for the cap to be reviewed once compensation payouts surpass a prescribed percentage of the cap. Another customer suggested that if we are not going to increase the cap now, we should at the least commit to reviewing the cap next year once the new compensation regime has been implemented.

We have considered this further feedback carefully and our decision as communicated on 8 December 2025 still stands. Below I set out our rationale against each of the above points.

Reliability compensation rate

It is important to emphasise again that our statistical analysis demonstrates a strong correlation between meeting the core service standard and the reliability performance, meaning we can confidently say that if Royal Mail does not meet the reliability targets, we will have already paid compensation, at the higher Band 2 compensation rates prescribed, to customers for its failure to meet the core service standard. On this basis the reliability compensation, at 1 pence per item, is additional compensation on top of the headline compensation for failure to meet reliability targets, thereby holding Royal Mail to account.

To bring this to life we have carried out analysis of the expected headline target performance corresponding to reliability compensation across the three Access product streams, based on our previous modelling. The table below shows, for each product stream, the headline performance we would have achieved at the point corresponding to when Reliability Compensation would become payable. In each case we would have triggered the higher Band 2 headline compensation rate.

Additionally, with the introduction of the reliability compensation scheme, we are further adding to an already sizeable compensation entitlement. To illustrate this, compared to a Standard Access price of c. 23 pence on Advertising Mail and 64 pence on Business Mail, the size of the compensation equates to 30% and 11% of the Access price respectively.

D+2 compensation rate

Based on feedback from customers which was provided throughout USO reform conversations, and on the actual volumes posted since August 2025, it is likely that the vast majority of Access volume will be posted on D+3 and D+5 services with a much smaller volume being posted on D+2. Whilst we recognise that the D+2 price is double the price of the D+3 service, given the already generous compensation rates we offer for the D+3 and D+5 service (which is further compounded by the introduction of the reliability compensation scheme – see above) we do not consider it would be appropriate or proportionate for Royal Mail to further increase the D+2 compensation rate, especially given we have already moved from our original consultation proposal.

Compensation cap

As we have consistently explained, increasing the cap would constitute a material shift in Royal Mail’s financial risk exposure, and such risk could only be mitigated by Royal Mail re-introducing pre-existing contractual requirements for customers to prove loss incurred because of Royal Mail’s failure to meet the contractual quality standards before becoming eligible for compensation.

In any case we believe customers’ interests can be reasonably protected, without changing the current compensation cap or introducing a change mechanism, through other changes we have outlined in our decision, including the introduction of a compensation scheme for failure to meet reliability targets.

To conclude Royal Mail’s decision, as communicated on 8 December 2025, shall remain on all the above 3 points.

Contract Change Notice Number 128 gives effect to the changes, as communicated in our decision document from 28 September 2026.

We would like to thank all customers once more for their valued input into this consultation. We will continue to focus our attentions on providing the best possible service to our customers.