Royal Mail has paid £43m in compensation to postal customers for late deliveries in the year to March 2004, the postal regulator has said.
Industrial action and a fire caused delays in the year to March 2004
Postcomm said the money was paid directly to private and business users.
Royal Mail must also pass on £17m in savings to consumers in the new financial year, which starts on 6 April.
Postcomm said Royal Mail had made "extensive" improvements since the end of March 2004.
Postcomm said the compensation was a result of poor service in 2003/2004 when Royal Mail missed its main service quality targets.
The Royal Mail said service had been disrupted as a result of industrial action at the end of 2003 and a serious fire at a mail centre.
Chief executive Adam Crozier said it had "transformed" the quality of service over the past year and its recent performance was the best in a decade.
Postcomm chairman Nigel Stapleton said Royal Mail had made improvements.
"The commissioners are pleased that the company has acknowledged that there were lessons to be learned in terms of how future change programmes are handled , and that it recognises its obligations to make amends to customers," Mr Stapleton said.