Recovering postal regulation and consumer advocacy costs

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About this document

Ofcom is responsible for regulating the UK postal market. In doing so, we incur costs. This
document is a consultation which sets out Ofcom’s proposed changes to the way we recover
our costs of regulating the postal sector.

Ofcom is also responsible for recovering the costs of consumer advocacy bodies, such as
Citizens Advice, in relation to their work in the postal sector. This document also sets out
Ofcom’s proposed changes to how we recover costs on behalf of these consumer advocacy
bodies

Section 1

1 Executive summary

1.1 In regulating the postal sector, Ofcom incurs costs. Ofcom recovers these costs
through an administrative charge to the postal sector. Each year, these charges must
be set so as to meet but not exceed Ofcom’s annual costs of regulating the relevant
sector.

1.2 Under the Postal Services Act 2011 (the “2011 Act”), Ofcom is required to set
administrative charges in the postal services sector in accordance with its charging
principles. In this document, we propose a number of changes to the statement of
charging principles: Postal services (SoCP) 2 which sets out how we charge postal
operators for the cost of regulation.

1.3 Under section 51 of the 2011 Act, Ofcom may also require postal operators to make
payments to the consumer advocacy bodies (CABs) in relation to their work on postal
services. The CABs are the Citizen’s Advice Bureau, Citizen’s Advice Scotland and
the General Consumer Council for Northern Ireland.

1.4 Ofcom has no role in setting the level of the CABs’ fees or examining the calculation
of consumer advocacy costs, which is a matter for the Secretary of State. We are
however responsible for recovering the fees on behalf of the Secretary of State. As
well as setting out a number of changes to how Ofcom recovers its own costs, this
document also proposes changes to how we recover consumer advocacy costs in
relation to postal services.

1.5 The purpose of this consultation is to seek views on the proposed changes.

Summary of our proposals

1.6 We propose to amend the SoCP so that:

1.6.1 turnover derived from services provided under a mandated access
agreement,
3 bulk mail services and single piece end-to-end letters services
is considered as relevant turnover for the purposes of recovering
administrative charges; and

1.6.2 the threshold for payment of an administrative charge is reduced from
turnover of £10 million to relevant turnover (i.e. turnover from services set
out in paragraph 1.6.1) of £5 million.

1.7 We propose to amend the relevant consumer protection condition so that the costs of
the CABs are recovered from the same group of postal operators that pay an
administrative charge to Ofcom, except where those costs relate to the provision of a
public consumer advice scheme via a caller helpline. Such costs will continue to be
Recovering postal regulation and consumer advocacy costs
collected from those postal operators who are the subject of enquiries which
generate these costs, subject to a minimum threshold.


Next steps

1.8 We invite comments from stakeholders on the proposals in this document. The
consultation runs for 8 weeks and the deadline for responses is 21 September 2017.
Annex 1 provides further details of how to respond.