Postal Services Act 2011

Part 3: Regulation of postal services

Summary and Background

134.Part 3 of the Act provides for a new regulatory framework that will apply to all postal operators. This new regulatory framework provides for the implementation of the amended Postal Service Directive 97/67 EC (“the Directive”).

135.The Act abolishes the criminal offence of conveying certain letters without a licence currently contained in the Postal Services Act 2000. In the new regulatory framework for postal services, there is no need to apply for a licence. Persons are automatically entitled to provide postal services provided that, if required, they notify OFCOM of this intention and comply with certain regulatory conditions set by OFCOM.

Postal services

Section 27: Postal services, postal packets and postal operators

136.This section defines terms which are used in Part 3 of the Act: “postal services”, “postal packet” and “postal operator”.

137.Subsection (4) excludes from the definition of “postal operator” a person who only receives packets on behalf of another (either as agent or otherwise), and subsection (5) confers a power on the Secretary of State to prescribe by regulations circumstances in which that exclusion does not apply.

138.Subsection (6) provides that the regulations made by the Secretary of State under subsection (5) are subject to affirmative resolution procedure.

Section 28: General authorisation to provide postal services

139.This section enables the shift from a licensing regime as established under the Postal Services Act 2000 to a regulatory framework based on general authorisation.

140.Subsection (1) provides that persons may provide postal services without the need for a licence or authorisation, but that OFCOM may impose regulatory conditions on postal operators who do provide postal services.

141.Subsection (2) lists the conditions that can be imposed: designated USP conditions (sections 36 and 37), USP access conditions (section 38 and Schedule 3), USP accounting conditions (section 39), notification condition (section 41), general universal service conditions (section 42), essential conditions (section 49), general access conditions (section 50 and Schedule 3) and consumer protection conditions (sections 51 and 52).

The universal postal service

Section 29: Duty to secure provision of universal postal service

142.Subsection (1) of this section provides that the primary duty of OFCOM in relation to postal services is to secure the provision of a universal postal service. This section should be read in conjunction with paragraph 57 of Schedule 12 to the Act, which amends the Communications Act 2003 to provide that, in pursuing their duties in relation to postal services, OFCOM must give priority to the duty under this section to secure the provision of a universal postal service.

143.Subsection (2) makes it clear that OFCOM’s duty to impose access conditions, and other regulatory conditions, is subject to their duty under subsection (1) to secure the provision of a universal postal service.

144.Subsection (3) sets out that OFCOM must have regard to both the need for the provision of a universal postal service to be financially sustainable and to the need for the provision of a universal postal service to be efficient before the end of a reasonable period of time when performing their duty under subsection (1).

145.Subsection (4) provides that, when having regard to the need for the universal service to be financially sustainable under subsection (3)(a), OFCOM must include the need for a reasonable commercial rate of return for a universal service provider on any expenditure incurred for the purpose of, or in connection with, providing the universal postal service.

146.Subsection (5) defines "reasonable period" in subsection (3)(b) as a period beginning on the day that the provisions in this Part of the Act come into force and which OFCOM consider, in all the circumstances, to be reasonable.

147.Subsection (6) requires OFCOM to carry out their functions in relation to postal services in a way that they consider will secure the provision of sufficient access points to meet the reasonable needs of users of the universal postal service.

148.Subsection (7) enables the Secretary of State to direct OFCOM to take, or refrain from taking, action to ensure that sufficient access points are provided throughout the United Kingdom to meet the interests of the public. "Interests of the public" in this subsection may be distinct from "user needs" in subsection (6). Subsection (10) requires the Secretary of State to consult OFCOM before making such a direction.

149.Subsection (11) defines the meaning of "access points" in this Part of the Act.

Section 30: The universal postal service

150.Subsection (1) provides that OFCOM must set out in an order, which will be known as the “universal postal service order”, a description of services that they consider must be provided in the United Kingdom as a universal postal service. This subsection also provides that they must set out the standards with which those services must comply.

151.Subsection (2) introduces section 31 which contains the minimum requirements for a universal postal service.

152.Subsection (3) provides that before making or modifying the universal postal service order, OFCOM must assess the extent to which the postal market in the United Kingdom is meeting the reasonable needs of users. This “market testing” is to enable OFCOM to determine what services (if any), other than those specified in section 31, should be provided as part of the universal service in the United Kingdom, in order to meet the reasonable needs of users.

153.Subsection (4) waives the requirement for OFCOM to carry out an assessment described in subsection (3) for their first universal postal service order. It requires that OFCOM must have carried out such an assessment within 18 months of Part 3 coming generally into force.

154.Subsection (5) allows the Secretary of State to direct OFCOM to exclude certain types of postal services from their first universal postal service order.

155.In Part 3 of the Act, the universal postal service means the universal postal service as defined by OFCOM in their order.

Section 31: Minimum requirements

156.This section sets out the services that must as a minimum be included in a universal postal service. These minimum requirements are broadly similar to those set out previously in the Postal Services Act 2000 (section 4) and comply with the requirements of Article 3 of the Directive defining the universal postal service. They are subject to certain exceptions as set out in Section 33.

157.“Requirement 1” is that, as a minimum, the universal postal service must include at least one delivery of letters every Monday to Saturday and one delivery of other postal packets every Monday to Friday. It makes clear that international mail is part of this minimum requirement.

158.“Requirement 2” is that at least one collection of letters every Monday to Saturday from every access point in the United Kingdom, and at least one collection of other postal packets every Monday to Friday. It makes clear that international mail is part of this minimum requirement.

159.“Requirement 3” is that there must be a service of conveying postal packets at affordable prices determined in accordance with a uniform public tariff. It makes clear that international mail is part of this minimum requirement.

160.“Requirement 4” is that there must be a registered items service at affordable prices determined in accordance with a uniform public tariff.

161.“Requirement 5” is that there must be an insured items service at affordable prices determined in accordance with a uniform public tariff.

162.“Requirement 6” is that specified services for blind or partially sighted persons are provided free of charge.

163.“Requirement 7” is that there must be a service of conveying qualifying legislative petitions to Parliament and devolved legislatures free of charge.

Section 32: Section 31: definitions

164.This section gives the definitions of “insured items service”, “legislative petitions and addresses” and “registered items service” for the purposes of section 31.

165.Subsection (1) introduces the term “insured items service”, defined by Article 2(10) of the Directive, which makes specific provision for the payment of an amount up to the value declared by the sender in the event of theft, loss or damage of a postal packet.

166.The definition of “legislative petitions and addresses” broadly reproduces the description of Parliamentary petitions and addresses given in the Postal Services Act 2000 at section 100.

167.Subsections (2) and (3) clarify that legislative petitions and addresses are those petitions to Her Majesty sent to a member of a legislative body (which includes either House of Parliament, the Scottish Parliament, the National Assembly for Wales or the Northern Ireland Assembly); or those addressed to a legislative body and sent to a member of such a body or to the Clerk of the Scottish Parliament; or those forwarded to Her Majesty (or in Northern Ireland the Secretary of State).

168.Subsection (3) clarifies that petitions and addresses (other than those forwarded to Her Majesty or, in Northern Ireland, the Secretary of State) fall within the definition only if they do not exceed 1kg and are sent without covers or in covers open at the side.

169.Subsection (4) defines the meaning of “registered items service”, which is similar to that in section 125 of the Postal Services Act 2000.

170.Subsection (5) clarifies that references made in the section to conveying postal packets from one place to another include conveying them to places outside the United Kingdom.

Section 33: Exceptions to minimum requirements

171.This section sets out when the minimum requirements described in section 31 need not be met.

172.Subsection (1) sets out the maximum weight and dimensions of postal packets (as defined in section 27(2) to include letters) to which the minimum requirements apply. This definition is similar to the definition of “relevant postal packets” in the section 4(7) Postal Services Act 2000 and implements Article 3(5) and (6) of the Directive.

173.Subsection (2) removes UK public holidays from the requirements of section 31. It further provides that the minimum requirements do not need to be met in geographical conditions or other circumstances that OFCOM consider to be exceptional.

174.Subsection (3) provides that the services required by section 31 do not need necessarily to continue uninterrupted during an emergency. It further provides that nothing in section 31 prevents individual agreements with customers on prices.

Section 34: Review of minimum requirements

175.This section gives OFCOM the power to review the needs of users of postal services and the extent to which the minimum requirements specified in section 31 meet those needs. Subsection (2) allows such a review to consider whether the minimum requirements could be changed better to reflect those needs.

176.Under subsection (3) a copy of any review of this nature that OFCOM does conduct must be sent to the Secretary of State and subsection (4) gives the Secretary of State the power to direct OFCOM to undertake such a review at any time.

177.Subsection (5) gives the Secretary of State the power to amend, by order, the minimum requirements for a universal service, provided that OFCOM have carried out a review under subsection (1). An order to amend is to be subject to the affirmative resolution procedure. No order can result in the service being non-uniform throughout the United Kingdom in respect of the tariffs, number of days' collection or number of days’ delivery.

Universal service providers

Section 35: Designation of universal service providers

178.OFCOM may designate one or more postal operators as universal service providers. They may only designate more than one universal service provider in two situations. The first situation is following a procurement determination under section 45. The second situation is following a postal administration order under Part 4. OFCOM must publish each designation. OFCOM may also review the designation(s) and consider what (if any) designated USP conditions (see section 36) should continue to apply to the designated universal service provider(s).

179.The procedure for making designations must be provided in regulations made by OFCOM. The procedures must be efficient, objective, proportionate, and transparent and should not give rise to any undue discrimination. These regulations must provide that if all of the universal service conditions that apply to a designated universal service provider are revoked then the designation should cease to have effect.

180.Subsection (11) specifies that OFCOM must notify the European Commission of each designation and the identity of each person designated. They must also notify the European Commission when designations cease to have effect. Article 4 of the Directive provides that each Member State must ensure the provision of the universal service and that member States may designate one or more undertakings as universal service providers so that the whole of the country is covered.

181.Article 4 of the Directive also provides that member States must notify the European Commission of the identity of universal service providers that they designate and that designations shall be subject to periodic review. This section therefore implements these provisions of the Directive.

Section 36: Designated USP conditions

182.Subsections (1) and (2) describe the designated USP conditions that OFCOM may impose on a universal service provider designated under section 35. OFCOM may impose one or more of the following types of requirement on the designated universal service provider. The first, under sub-section (2)(a), is a requirement to provide a universal service or part of such a service, throughout or in a specified part of the UK, in accordance with the standards set out in the universal postal service order. The second is to provide, or make arrangements for the provision of, access points for the purposes of a universal postal service. The third is to provide, to other postal operators and postal services users, specified information about the services it is required to provide under subsection (2)(a). OFCOM may also impose a requirement to do anything else that they consider appropriate for the purposes of or in consequence of the preceding requirements.

183.Subsection (3) provides that a designated USP condition may only be imposed if it appears to OFCOM it is necessary to do so in order to secure the provision of the universal service in accordance with the standards as set out in the universal service order (made under section 30).

184.Subsections (4) and (5) provide that a designated USP condition may also set tariffs (price controls) for the provision of a universal service or part of a universal service. OFCOM must ensure that the prices that are set are affordable, take account of the costs of providing the service or part of a service, and that they incentivise the service to be provided efficiently.

185.Subsection (6) provides that a designated USP condition may also impose performance targets.

186.Subsection (7) provides that where there is more than one universal service provider, OFCOM must ensure that universal service obligations imposed on the providers do not overlap, and designated universal service provider conditions can include requirements on providers to make arrangements that will help ensure a uniform and effective universal postal service throughout the UK.

Section 37: Publication of information about performance

187.This section provides that designated USP conditions must include provision requiring a designated universal service provider to publish information about its provision of a universal service in accordance with specified standards, and may include other conditions requiring information to be published in relation to its performance in complying with specified requirements. “Specified” means specified in the condition. These conditions must also include a requirement for the provider to publish an annual performance report which must be audited by a person who is independent of both OFCOM and universal service providers for accuracy and, if there are two or more universal service providers, for its usefulness in comparing information published by another provider. Information previously published must be updated and published again. When and where it is published may also be specified.

188.The Directive requires Member States to ensure that universal service providers publish annual reports which have been independently audited (Article 16 and 19). These provisions implement the publication requirements of those Articles.

Section 38: USP Access conditions

189.This section provides for OFCOM to set a condition which enables other postal operators or users to access the network of the universal service provider and to require the universal service provider to maintain separate accounts so that costs of access can be accurately calculated.

190.Subsection (2) describes the access condition that OFCOM may impose on the universal service provider requiring it to give access to other postal operators, or users of postal services, and/or to maintain accounting separation relating to access to its postal network. Access may be required to the postal network of the universal service provider and this is defined in subsection (3) as the systems and all the resources used for the purpose of complying with its universal service obligations, including arrangements made with others for the provision of any service. This is in line with Article 11a of the Directive which gives Member States the right to adopt measures to ensure access to the postal network under transparent, proportional and non-discriminatory conditions.

191.Subsection (4) provides that OFCOM may not impose a USP access condition unless it appears to them that it is appropriate to promote efficiency, effective competition and to confer significant benefits on the users of postal services.

192.Subsection (5) provides that OFCOM may not impose any price controls on the universal service provider unless it appears to them that the USP might charge excessively high prices or impose a price squeeze.

193.Subsection (6) provides that in imposing price controls in a USP access condition, OFCOM must have regard to such of the costs incurred in the provision of that network, or part of that network, as OFCOM consider appropriate. This will allow OFCOM to consider both actual and efficient costs.

194.Subsection (7) provides that when imposing price controls, OFCOM may have regard to the prices at which services are available in comparable competitive markets and determine what they consider to be efficiency by using cost accounting methods.

195.Subsection (8) provides that in deciding what obligations to impose in a USP access condition, OFCOM must take account of a number of factors in addition to their overarching duty to secure the provision of the universal postal service set out in section 29. These include technical and economic viability, feasibility, investment made by the universal service provider, the need to secure effective competition in the long term, and intellectual property rights.

196.Subsection (9) clarifies that the giving of access to the postal network includes giving a person an entitlement to use, be provided with or become a party to any services, facilities or arrangements comprised in that network.

197.This section is supplemented by the provisions in Schedule 3, which provide for the kind of matters that may be included in USP access conditions and the resolution of access disputes by OFCOM.

Section 39: USP accounting conditions

198.Subsections (1) and (2) of this section describe the USP accounting conditions that OFCOM may impose on a universal service provider to maintain separate accounts between different matters as directed by OFCOM, to comply with rules about cost identification and orientation or the use of accounting systems in relation to those matters and to have compliance with those systems audited annually by a qualified independent auditor. This is in line with Article 14 of the Directive on the separation of accounts of universal service providers.

199.Subsection (3) provides that when OFCOM imposes a USP accounting obligation that requires accounting separation, the obligation may provide for accounting separation to be maintained for different services, facilities or products (including in different areas) and may impose requirements about the accounting methods to be used.

200.Subsection (4) provides that when OFCOM imposes a USP accounting obligation that requires compliance with rules about cost identification or the use of accounting systems, the obligation may include the application of presumptions on fixing or determining costs and charges and may require publication of the accounts and other information related to the condition. Additionally, when the USP accounting condition relates to the use of cost accounting systems, subsections (6) and (7) provide that OFCOM may require a description of the accounting system be made publicly available, including details of the cost categories and rules of cost allocation.

201.Subsection (5) provides that when OFCOM imposes a USP accounting condition requiring the auditing of a provider’s compliance with accounting systems, OFCOM may require the universal service provider concerned to meet the costs of the audit.

202.Subsection (8) provides that the reference to a ‘qualified independent auditor’ in subsection (2) means a person qualified to act as a statutory auditor under the Companies Act 2006 and one who can be classified as independent under that Act.

Persons providing services within scope of universal postal service

Section 40: Services within scope of the universal postal service

203.This section defines the meaning of “services within the scope of the universal postal service”. This definition is relevant to those who may be subject to general universal service conditions under section 42. This definition is also relevant to those who may be subject to the recovery of administrative charges incurred by OFCOM (section 43) and to general access conditions (section 50).

204.Subsection (1) sets out that a service is within the scope of the universal service, first, if it falls within the description of a service set out in the universal postal service order made under section 30. Second, a service is within the scope of the universal service if it would fall within the description of a service set out in the universal postal service order, but collection and delivery are not provided on each of the days required under section 31, or the service is not provided throughout the UK, or the service is not provided at an affordable uniform price. Finally, a service is also within the scope of the universal postal service if OFCOM believe it is inter-changeable from users’ point of view with one set out in the universal postal service order.

Section 41: Notification condition

205.This section provides that OFCOM may impose a notification condition on any person providing or intending to provide a service within the scope of the universal postal service. A notification condition requires the person to give OFCOM advance notice of their intention to provide a letters business on a specified scale, or to expand the business by a specified extent.

206.Subsection (4) enables the Secretary of State to direct OFCOM to impose a notification condition.

Section 42: General universal service conditions

207.Subsection (1) provides that OFCOM may impose a general universal service condition on every postal operator providing a service within the scope of the universal service or to specified descriptions of such operators.

208.Subsection (2) of this section describes a general universal service condition. It is either a condition OFCOM consider necessary for the purpose of securing that a universal service is provided in accordance with the standards set out in the universal postal service order, or it is a condition imposed for the purposes of sharing the financial burden of universal service obligations.

209.Subsection (3) sets out some of the things that general universal service conditions may require postal operators providing services within the scope of the universal service to do. Subsection (3) also provides that the conditions may require persons to make contributions towards the costs of complying with designated USP conditions, in accordance with section 46.

210.Subsection (4) provides that, where there is a designated universal service provider, OFCOM cannot impose a general universal service condition requiring a person to provide services required by section 31.

Section 43: Recovery of administrative charges incurred by OFCOM

211.OFCOM may impose charges on postal operators providing services within the scope of the universal postal service to meet OFCOM’s costs in regulating postal services. Schedule 4 contains further provision about these charges.

Financial support for universal postal service

Section 44: Review of costs of universal service obligations

212.Section 44 provides that OFCOM may from time to time review the extent of the financial burden for a universal service provider of complying with its universal service obligations. These are defined as the obligations imposed on it by a designated USP condition. As part of any such review OFCOM must consider the extent to which the universal service provider is complying with those obligations cost-efficiently. No review under this section may be carried out for five years from the day this section comes into force unless the Secretary of State directs otherwise.

213.OFCOM must apply the method of calculating the burden set out in designation regulations (section 35), where those regulations require the financial burden to be taken into account in the designation decision and provide for a particular method of calculation. Where the regulations under section 35 do not provide for a particular method of calculation of the financial burden, subsection (4) provides that the financial burden shall be taken to be the net cost of compliance after allowing for market benefits of being the designated universal service provider. The conclusions of this review, and a summary of the audit, must be published.

214.This section together with section 46 transposes new Article 7 of the Directive. This new article expands the provision of former Article 9(4) to clarify a range of alternatives available to Member States when there is a need for external financing of the universal service obligations. The financing alternatives include the establishment of a compensation fund with contributions from service providers (and user’s fees), where the Member State has determined that universal services obligations entail a net cost which represents an unfair financial burden on the universal service provider(s).

Section 45: Fairness of bearing burden of universal service obligations

215.This section requires OFCOM, where they have concluded from a section 44 review that universal service obligations impose a financial burden on a universal service provider, and published that conclusion, to determine whether they consider it would be unfair for that provider to bear the whole or part of the burden.

216.OFCOM must determine whether the burden would be unfair for a provider to bear or continue to bear, and the extent (if any) to which the burden would be unfair, in accordance with regulations they have made under subsection (3). They must publish the determination.

217.If OFCOM make such a determination, they must submit a report to the Secretary of State with a recommendation for what action (if any) they consider necessary to deal with the burden. The report may make recommendations about the order in which action should be taken and whether certain actions should be contingent on other actions. The recommended action may consist of one or more of: a review under section 34 (review of minimum requirements); requiring contributions to be made in accordance with section 46; and making a procurement determination.

218.Subsection (9) sets out that a procurement determination is a determination by OFCOM as to whether any particular postal operator or operators (including the provider) could meet the universal service obligations in such a way that would mean no unfair burden or less of an unfair burden than the burden identified in OFCOM’s determination in subsection (6). Any such determination must be made in accordance with regulations made by OFCOM. Subsection (14) prevents OFCOM from making a procurement determination within ten years from the day that this Part of the Act comes into force, unless the universal service provider agrees to such a determination.

219.After receiving the report, the Secretary of State must determine what action (if any) ought to be taken to deal with the burden and can then direct OFCOM to take that action.

Section 46: Contributions for meeting burden

220.This section applies where the Secretary of State has directed OFCOM to require contributions to be made for meeting some or all of the burden concerned.

221.OFCOM may then determine that contributions for meeting that financial burden are to be made by postal operators providing services within the scope of the universal service, and/or through the charges paid by users for using a service, as provided by the Directive.

222.Subsection (3) provides that OFCOM may require contributions only from a description of postal operator or user.

223.Subsection (4) provides that the assessment, collection and distribution of contributions can only be made if it is in accordance with a mechanism in a scheme contained in regulations made by OFCOM.

224.Subsection (5) provides that in making any regulations under this section, OFCOM must seek to ensure that the assessment, collection and distribution of contributions is objective, proportionate and transparent, does not involve (or tend to give rise to) any undue discrimination, and avoids or minimises distortion of competition.

225.Subsections (6) and (7) provide that a scheme can be administrated by OFCOM or an independent person specified by OFCOM in their regulations. An independent person means independent of both universal service providers and postal operators providing postal services within the scope of the universal postal service.

226.Subsection (8) provides that Regulations setting out such a scheme are subject to consent by the Secretary of State, and to the affirmative resolution procedure.

Section 47: Report on sharing mechanism

227.This section requires that, where regulations provide for a scheme to share the burden of the universal service (section 46), OFCOM must report annually on the sharing mechanism and for the reports to be published. OFCOM are not required to publish confidential information.

Postal operators generally

Section 48: Notification by postal operators

228.Under the new authorisation system established by section 28, postal operators are not required to notify OFCOM prior to providing postal services. However, this section provides that the Secretary of State may make regulations (subject to the negative resolution procedure) requiring them to do so. The Secretary of State must consult OFCOM before making regulations. Regulations may make provisions corresponding to any of the provisions of sections 33 to 37 of the Communications Act 2003.

229.Subsection (4) provides that the maximum penalty that can be imposed by the regulations for failure to comply must not exceed the maximum under section 37(6) of the Communications Act 2003 (currently £10,000).

230.Subsections (5) to (9) provide that if the Secretary of State makes such regulations, OFCOM must establish and maintain a register to record every notification. OFCOM must publish the times when the register can be seen by the public and what fees, if any, must be paid for doing so.

Section 49: Essential conditions

231.Section 28 allows OFCOM to impose regulatory conditions on those providing postal services, which may include an “essential condition”. This section describes what “essential condition” can be imposed and on whom.

232.Subsection (1) provides that these conditions may be applied to every postal operator or to those of a particular description specified in the condition.

233.Subsection (2) provides that the essential conditions may be imposed for one of five reasons: to safeguard confidentiality of sending, conveying and delivery of letters, to safeguard security where dangerous goods are transported; to safeguard confidentiality of information conveyed; to guard against theft or loss of or damage to postal packets; and to secure the delivery of postal packets to the intended addresses.

Section 50: General access conditions

234.This section describes the general access conditions that OFCOM may impose on any postal operator requiring it to give access to other postal operators, or users of postal services, and/or to maintain accounting separation relating to this access. Access may be required to the postal operator’s postal infrastructure, including both physical infrastructure (such as letter boxes) and non-physical infrastructure (such as information relating to postcodes), or any service which the postal operator provides within the scope of the universal postal service. This section transposes the first part of Article 11a of the Directive.

235.Subsection (4) provides that a general access condition may only be imposed if it appears to OFCOM that it is necessary to protect the interests of the users of postal services and/or to promote effective competition.

236.Subsection (5) provides that in deciding what obligations to impose in general access conditions, OFCOM must take account of a number of factors, in addition to their overarching duty to secure the provision of the universal postal service set out in section 29. These include technical and economic viability, feasibility, investment made by the postal operator, the need to secure effective competition in the long term, and any relevant intellectual property rights.

237.Subsection (6) provides that for the purposes of this section, reference to giving a person access to an operator’s postal infrastructure includes giving a person an entitlement to use, be provided with or become a party to any services, facilities or arrangements comprised in the infrastructure.

238.This section is supplemented by the provisions in Schedule 3, which set out the kind of matters that may be included in general access conditions and the resolution of access disputes by OFCOM.

Section 51: Consumer protection conditions

239.Section 28 allows OFCOM to impose regulatory conditions on those providing postal services, which may include “a consumer protection condition”. This and section 52 describe what consumer protection condition may be imposed.

240.Subsection (1) provides that the condition may be applied to every postal operator or to those of a particular description specified in the condition.

241.Subsection (2) describes the consumer protection condition that OFCOM may impose on any postal operator. It may include requiring the postal operator to assume specified liability for loss of, or damage to, postal packets, to establish and maintain procedures, standards and policies for consumer protection matters, and to make payments relating to qualifying consumer expenses of the National Consumer Council or the Office of Fair Trading. Subsection (3) provides that “consumer protection matters” include the handling of complaints, resolution of disputes, provision of remedies and redress, and information to users about service standards and users’ rights.

242.Subsection (4) provides that the reference to “qualifying consumer expenses” of the National Consumer Council or the Office of Fair Trading is to such of their expenses as the Secretary of State considers reasonable, having regard to their functions exercisable in relation to users of postal services.

243.Subsection (5) provides that in imposing a consumer protection condition, OFCOM must, as far as they consider appropriate, secure that the procedures for handling complaints and resolving disputes are easy to use, transparent, effective and facilitate the settling of disputes fairly and promptly; that they are free of charge to users; and that where postal operators contravene the condition the operator follows the procedure as may be required by the condition.

244.Subsection (6) provides that the Secretary of State may direct OFCOM to include provision within consumer protection conditions relating to the payment of expenses of the National Consumer Council or the Office of Fair Trading.

245.This section implements Article 19 of the Postal Services Directive (Directive 2008/6/EC) which provides that Member States must ensure that transparent, simple and inexpensive procedures are made available for dealing with postal users’ complaints.

Section 52: Provision that may be made by consumer protection conditions

246.This section provides that postal operators may be required by a consumer protection condition to be members of a redress scheme under which complaints may be made to and investigated by an independent person. Redress schemes are approved in accordance with Schedule 5. Postal operators may be required to publish information about the number of complaints made about them, how they were dealt with, and to provide OFCOM with information about their compliance with standards for handling complaints. In the case of the designated universal service provider, a consumer protection condition must include a requirement to publish information about the number of complaints made about them. This is required by and implements Article 19.2 of the Postal Services Directive (Directive 2008/6/EC).

General provisions

Section 53: Imposition, modification or revocation of regulatory conditions

247.This section introduces Schedule 6, which provides for the imposition, modification or revocation of regulatory conditions.

Section 54: Enforcement of regulatory requirements

248.This section introduces Schedule 7, which provides for the enforcement of regulatory requirements imposed on postal operators by OFCOM.

Section 55: Information

249.This section introduces Schedule 8, which provides for requirements to provide information to OFCOM, the enforcement of those requirements and supplementary provisions.

250.Subsection (3) provides that nothing in Schedule 7 of the Postal Services Act 2000 (disclosure of information) prevents the Postal Services Commission from disclosing information to OFCOM for the purposes of OFCOM’s functions in relation to postal services.

Section 56: General restriction on disclosure of information

251.This section prohibits the disclosure of information obtained by virtue of Part 3 that relates to an individual or particular business during their lifetime or so long as the business is carried on, except as permitted by the section.

252.Subsection (2) provides that disclosure is permitted: with the consent of those concerned; to facilitate the carrying out of functions of OFCOM, the Secretary of State, the Treasury or the Competition Commission or to facilitate the carrying out by a person prescribed (by order of the Secretary of State) of functions under an enactment prescribed (by order of the Secretary of State); in relation to criminal investigations or proceedings; in relation to civil proceedings brought by virtue of Part 3 of the Act or any enactment prescribed (by the Secretary of State by order); to meet EU obligations; or other circumstances or purposes prescribed by the Secretary of State by order. Subsection (4) provides that an order by the Secretary of State is subject to the affirmative resolution procedure.

253.Subsection (5) provides that this section does not apply to information made public in circumstances in which, or for a purpose for which, disclosure is not precluded by this section.

254.Subsection (6) provides that the section does not apply either to information obtained by OFCOM for its competition functions or to information obtained by the National Consumer Council, as this information is subject to the disclosure regime in Part 9 of the Enterprise Act 2002 (c. 40).

255.Subsections (7) and (8) provide that it is an offence to disclose information in contravention of the prohibition in this section, punishable by a fine or imprisonment of no more than two years.

Appeals

Section 57: Decisions by OFCOM to impose regulatory conditions, impose penalties etc

256.Subsection (1) defines a 'qualifying decision' for the purposes of this section as a decision by OFCOM that:

257.Subsection (2) provides that a person affected by a qualifying decision (as defined in subsection 1) may appeal against it to the Competition Appeal Tribunal (the CAT).

258.Subsection (3) specifies that an appeal must be made by sending a notice of appeal to the CAT in accordance with rules made under section 15 of the Enterprise Act 2002. These rules are set out in a Statutory Instrument and can be found on the CAT website www.catribunal.org.uk. Subsection (4) requires that the notice of appeal must be sent within the period set out in the rules.

259.Subsection (5) requires the CAT, in determining an appeal under this section, to apply the same principles as would be applied by a court on an application for judicial review.

260.Subsection (6) provides that the CAT may either dismiss the appeal or quash all or part of the decision against which the appeal was made. If the CAT quashes all or part of the decision, subsection (7) provides that it may refer the matter back to the decision maker (OFCOM) directing them to reconsider and make a new decision which takes account of the ruling.  Subsection (8) ensures that the CAT  , in making such a direction, cannot require  OFCOM to take action which they would not otherwise have the powers to take in relation to the decision.

261.Subsection (9) provides that the decision of the Regulator stands while an appeal is being made. The exception to this is in cases concerning a penalty of the imposition or enforcement of a regulatory condition.

Section 58:  Appeals from the CAT

262.Subsection (1) provides that an appeal on a point of law may be made to the appropriate court (as set out in subsection (4) this is the Court of Appeal in England and Wales and in Northern Ireland, and the Court of Session in Scotland).

263.Subsection (2) provides that such an appeal may be brought by a party to the proceedings in the original appeal or by any other person who has a sufficient interest in the matter.

264.Subsection (3) provides that an appeal may be made only with the permission of the CAT or the appropriate court.

Section 59: Price control decisions

265.This section provides for an appeal to the Competition Commission against a price control decision on the grounds that OFCOM has made a material error (or errors). It also sets out the timeframe in which appeals must be determined.

266.An appeal must be made within two months of the original decision and must be made in accordance with the requirements of the Commission on the form of appeals or the way in which they must be made. The Commission must determine the appeal within four months of the day on which OFCOM refer the appeal or 6 months in exceptional circumstances. The making of an appeal against a decision does not suspend the effect of the decision whilst the appeal is being considered.

267.Subsection (6) provides that on determining the appeal, the Commission must dismiss the appeal, allow the appeal and make its own decision on the subject matter of the appeal or quash all or part of the price control decision to which the appeal relates.

268.The Commission may only allow the appeal, or quash all or part of the price control decision to which it relates, if it considers that OFCOM made a material error. Subsection (8) provides that, on quashing all or part of the price control decision, the Commission may refer the matter back to OFCOM with a direction to make a new decision in accordance with its ruling. The Commission may not direct OFCOM to take any action which they would not otherwise have the power to take.

269.Subsection (10) provides that OFCOM must give effect to any decision of the Commission as soon as is reasonably practicable after it is made.

270.Subsection (11) provides that the Commission may investigate any matter or do any other thing in order to allow the appeal or reach its own decision.

271.Subsection (12) provides that decisions made by the Competition Commission in respect of this section may be appealed to the CAT as provided for under section 55.

272.Subsection (13) defines a price control decision for the purposes of this section.

Section 60: section 59 supplementary

273.This section provides a power for the Competition Commission to make rules regulating the conduct of appeals under section 59.

274.Subsection (2) provides that the rules may impose time limits and other restrictions on the taking of evidence and the making of representations or observations at an oral hearing.

275.Subsection (5) provides that the Commission must consult in the making of its rules, and subsection (4) provides that the Commission must publish the rules that it makes.

276.Subsection (6) provides for the Secretary of State by order to apply the investigation powers the Commission currently has under the Enterprise Act 2002 in relation to its appeal function under section 59 and make provision for extending the period within which appeals must be determined when requirements as to attendance of witnesses and production of documents have not been complied with.

277.Subsection (7) ensures that an order made by the Secretary of State under subsection (6) cannot impose civil or criminal penalties at greater levels that those specified in the Enterprise Act 2002.

Supplementary and consequential provisions

Section 61: Duties in relation to social and environmental matters

278.This section enables the Secretary of State to give guidance to OFCOM, in respect of carrying out their functions relating to postal services, on its contribution to social or environmental policies set out in the guidance, in which case OFCOM must have regard to that guidance. The Secretary of State must consult OFCOM, the National Consumer Council and other persons as considered appropriate on any proposed guidance and a draft must be laid before Parliament. Parliament may resolve that the guidance should not be given. The Secretary of State must publish any guidance given under subsection (1).

Section 62:  UK postage stamps bearing image of Her Majesty

279.This section provides that the Secretary of State may give a direction to a universal service provider requiring the provider to issue postage stamps bearing the image of Her Majesty. A direction may also relate to the subject matter and frequency of stamp issues and the process for design approval. If given, a direction must require stamps bearing the image of Her Majesty not to be issued without Her Majesty’s approval. The person to whom the direction is given has a duty to comply with the detail of direction. The duty can be enforced in civil proceedings by the Secretary of State.

Section 63: Orders, schemes and regulations made by OFCOM

280.This section provides for section 403 of the Communications Act 2003 to apply to any power of OFCOM under Part 3 to make an order, a scheme or regulations. This means that orders, scheme and regulations are made by statutory instrument. OFCOM are required to give notice to those likely to be affected by an order scheme or regulations and invite their representations before making the instrument.

Section 64: Abolition of Postal Services Commission etc

281.This section abolishes the Postal Services Commission, and applies the provisions of the Communications Act 2003 applicable to pre-commencement regulators under that Act in respect of transfers of property, rights and liabilities to the transfer from Postcomm to OFCOM. It makes provision for the Transfer of Undertakings (Protection of Employment) Regulations 2006 to apply to the transfer of staff from Postcomm to OFCOM. It also provides that the transfer of functions, assets or liabilities from Postcomm to OFCOM under or by virtue of this Act is not to be treated as a merger for accounting purposes.

Section 65: Interpretation of Part 3

282.Subsection (1) defines various terms used in Part 3 of the Act.

283.Subsection (2) defines references to a universal postal service.

284.Subsection (3) applies references to a universal service provider to a person who provides part of a universal service or universal service provision in a specified area of the country.

285.Subsection (4) defines contravention and other references relating to contraventions (for example, remedying the consequences of a contravention).

286.Subsection (5) provides that any directions made under this Part of the Act must be in writing and may be varied or revoked by a further direction.

Section 66: Transitional provisions for Part 3

287.This section introduces Schedule 9, which contains transitional provisions in relation to the coming into force of Part 3 of the Act.

Section 67: Review of Part 3

288.This section provides for there to be a review of the provisions of Part 3 within 5 years after the provisions of the Part generally come into force. The Secretary of State must set out the conclusions of the review in a report and lay the report before Parliament. The report must, in particular, set out the objectives intended to be achieved by the regulatory system established by the provisions; assess the extent to which the objectives have been achieved; and assess whether those objectives remain appropriate and, if so, whether they could be achieved by a system that imposed less regulation.