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25 July 2014
Initial Complaint Review and Mediation Scheme
BRIEFING REPORT - PART ONE
PREPARED BY
SECOND SIGHT
This Report and accompanying documents are confidential and are not to be
disclosed to any person other than a person involved in the processing of
Applicants’ claims through the Scheme
Part Two of this report will be provided where necessary to the processing of
an Applicant's claim
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1. Introduction
1.1. This report describes some aspects of Post Office branch operating procedures and related
functions of the Horizon system. The report has been prepared by Second Sight, which is the
trading name of Second Sight Support Services Limited, the company appointed to conduct an
independent investigation of a number of matters raised by Subpostmasters, or former
Subpostmasters.
1.
iS
. Horizon is the electronic point of sale system, which together with associated back office
functions is used across all Post Office branches to process and record a wide range of
transaction types. The term "Horizon" is used throughout this report to refer to both the
original Horizon system, which dates back to 1995, and the current version of Horizon,
introduced in 2010, known as Horizon On Line. Where important, the differences between the
two versions are explained. The Horizon system, including the main technical aspects of the
two versions, is described in more detail later in this report.
1.3.A Glossary of Terms has been provided by Post Office and is attached at Appendix 1. Examples
to demonstrate how an individual transaction or process operates have been included where
relevant.
2. Structure of this document
2.1. This document comprises seven major sections providing:
e® General information about Post Office, its branches and the role of Subpostmasters;
e Adescription of the training and support functions as well as the Post Office audit and
investigation processes;
e An overview of the Horizon system and associated equipment;
e An introduction to the application of double entry accounting in Horizon;
e Adescription of significant branch operating and reporting procedures and the associated
processing of transactions;
e An outline of the treatment of losses and surpluses; and
¢ An analysis of typical errors.
3. Post Office Branches and Subpostmasters
3.1. The Post Office was part of the Royal Mail Group until the two businesses separated in April
2012. The majority of its income is self-generated, but it does receive financial support from its
ultimate shareholder, the UK government.
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3.2. Including staff in Crown branches (see below), Post Office directly employs almost 8,000 people,
in support of the Post Office network, These management and support roles include central
staff as well as field-based sales, development, training , audit and security teams.
3.3. In addition there are approximately 6,000 Subpostmasters, who are the main focus of this
report, and employees of "Multiples" (see 3.32).
3.4. Post Office’s network of around 11,500 branches provides a range of approximately 170
products and services, as described by Post Office. This is set out in Appendix 2, including
banking and access to government benefits. Some of the consequences of providing such a
wide range of services are considered in Part Two of this report.
Subpostmasters
3.5. The majority of Post Office branches are run by independent Subpostmasters and are known as
"Agency" branches. Subpostmasters are, in the main, individuals who are contracted to run
Post Office branches. They operate as individual contractors rather than as employees of Post
Office and their position can be considered as being similar to that of a franchisee.
3.6. Before appointment as a Subpostmaster, the applicant is vetted by Post Office for suitability
and is appointed under the terms of a standard contract (see 3.13 onwards for more details).
3.7. Prior to 2001 Post Office sometimes charged a new Subpostmaster a fee in recognition of the
benefit arising from being granted the opportunity to run a Post Office branch. This fee took
the form of a 25% abatement of the Subpostmaster's remuneration for the first year following
appointment, but we are advised that such charges have now ceased.
3.8. Should a Subpostmaster either resign or serve notice to terminate their contract for services
then Post Office will normally seek to appoint a replacement Subpostmaster to the branch. If
there is no transfer of premises or retail business as part of the replacement appointment
process, as described below, then Post Office may levy an introductory payment on the new
Subpostmaster. Although this charge is not made in all cases it would be made as an upfront
charge at the start of the new Subpostmaster’s contract for an amount equivalent to 25% (plus
VAT) of the gross remuneration for the branch in question.
3.9. As noted above, it is possible that as part of the appointment of a new Subpostmaster to an
existing branch, there could also be a transfer of premises and/or ancillary retail business from
the old to the new Subpostmaster. In such cases there would normally be an additional
financial agreement, effectively equivalent to a payment for goodwill, between the parties.
Temporary Subpostmasters
3.10. In the event of a Subpostmaster being either suspended, or his/her contract being
terminated, a Temporary Subpostmaster may be appointed to take over the running of a
branch.
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3.11. Temporary Subpostmasters operate the branch and receive remuneration from Post Office
under the same contract terms as Permanent Subpostmasters, except that their notice period is
one week rather than three months. The terms under which a Temporary Subpostmaster will
operate from an incumbent Subpostmaster's premises will be agreed between the parties.
Typically, this involves the Temporary Subpostmaster paying a weekly or monthly "rent" to the
incumbent Subpostmaster.
3.12. Post Office keeps a list of pre-approved Temporary Subpostmasters who can be called upon
at short notice to take over the running of a branch in order to allow continuity of service.
Subpostmaster’s contract
3.13. The majority of Subpostmasters currently provide services to Post Office under the terms of
a standard contract. Although subject to several revisions over the years, it is understood that
the core principles of the contract have generally remained unchanged since 1994.
3.14. Relevant sections of the standard contract are commented on in Part Two of this report and
a copy of the whole contract is available on request.
3.15. Under the terms of the contract, Subpostmasters are remunerated based on a combination
of fixed and variable amounts calculated according to the volume of business that they transact.
3.16. In terms of carrying out Post Office business, the Subpostmaster is an agent of Post Office.
In legal terms, Post Office business is a transaction between the customer and Post Office
Limited, with the Subpostmaster acting as Post Office's agent to complete the transaction.
3.17. As the Subpostmaster is not undertaking business in his own name, the cash and stock held
at a branch is owned by Post Office and, in effect, the Subpostmaster acts as a steward of these
assets. Subpostmasters are "responsible for all losses caused through their own their
negligence, carelessness or error" (contract clause 12(12)). Subpostmasters are additionally
“required to make good any deficiency, of cash or stock, which may result from his assistant's
actions" (contract clause 15(2)).
3.18. If cash or stock is lost due to the fault of the Subpostmaster, the Subpostmaster is obliged to
reimburse Post Office for that loss. The contract also provides that ‘surpluses may be
withdrawn provided that any subsequent charge up to the amount withdrawn is made good
immediately’ (contract clause 12(14)). The treatment of losses and surpluses is dealt with more
fully in section 9 of this report.
3.19. Errors by Subpostmasters can sometimes result in a Subpostmaster’s contract being
suspended and/or terminated, and/or action being taken to recover any related loss. An
evaluation of the significance and seriousness of any such errors and losses, together with any
associated action, is determined by Post Office usually after an Audit of the branch has been
carried out by Post Office staff (see 4.32 onwards for more detail on the nature of a Post Office
Audit).
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3.20. Where Post Office suspects criminal wrongdoing by Subpostmasters or their staff (as well as
staff at Crown offices) then it may exercise a general common law right (only available in
England and Wales) to pursue a private prosecution. Alternatively it may refer the matter to
national prosecution authorities, as is required in Scotland (the Procurator Fiscal) and Ireland.
More serious cases such as armed robbery are referred directly to the police for action.
3.21. Typical criminal prosecutions are for theft or fraud, including false accounting (the latter
where a Subpostmaster has declared transactions or stock and cash levels within the branch
which the Subpostmaster knows are not true).
3.22. Post office states that prior to any private prosecution being pursued the circumstances will
be investigated by the Post Office Security Team. This information is then reviewed by Post
Office lawyers to determine whether the case is suitable for prosecution.
3.23. Once a prosecution is underway and potentially proceeding to trial the case is kept under
review and should circumstances change Post Office can decide to stop the prosecution by
“offering no evidence".
3.24. If a defendant is convicted, either by their own guilty plea, which could follow plea
negotiations, or following a trial then the Court may order the person to pay Post Office's legal
and investigation costs and also possibly compensation. In some cases Post Office may seek a
Confiscation Order against a convicted defendant to obtain compensation for losses suffered.
3.25. In addition to criminal prosecutions Post Office may use the civil recovery process to recover
sums claimed to be due from Subpostmasters. This process is not normally used where a
Subpostmaster is in post as agreement can often be reached to deduct any amounts due from
remuneration or by way of instalments. If the civil recovery process is pursued then this will
typically follow three, escalating stages (i.e. direct communication, involvement of external
lawyers and legal proceedings) during which further investigations of issues raised can be made,
possibly resulting in an amendment of amounts claimed as being due.
3.26. Although retaining full contractual responsibility a Subpostmaster does not need to be
personally involved in the running of a branch and may employ assistants to conduct branch
business but is not required to notify Post Office of the arrangement. In some cases, a
Subpostmaster may employ a Manager to run the branch and may have only minimal personal
involvement in the provision of contractual services and day-to-day operations.
3.27. _ Each Subpostmaster typically owns (or leases from a third party landlord) the premises from
which the branch is run. Other than Post Office setting minimum standards for the premises
(in terms of legal ownership rights, physical security, etc.) it is the Subpostmaster’s
responsibility to provide and operate the branch premises.
3.28. I The premises may often be part of an existing business such as a convenience store, typically
referred to as the “retail business". Part of the premises may be used for transacting Post
Office business and the Post Office equipment, cash and stock is generally kept away from the
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retail business although the new “local model”, which is being introduced as part of the
Network Transformation Programme (see 3.33 and 3.34), is changing this position.
Branch types
3.29. Although the focus of this review relates principally to the operation of "Agency" branches,
there are other types of branches within the Post Office network, which are staffed in a
different manner. These include “Crown” branches and “Multiples” as described in 3.32.
Crown
3.30. There are around 350 Crown branches that are directly owned and run by Post Office. The
staff at Crown branches are employees of Post Office Limited and each branch is run by an
employed “branch manager” rather than a Subpostmaster.
3.31. Staff and managers of Crown branches are employees of Post Office and, unlike
Subpostmasters, are not liable for losses as these are directly absorbed by Post Office. The
operating procedures at Crown branches are however largely the same as those at Agency
branches, including the operation of the Horizon system.
Multiples
3.32. Branches are sometimes located in premises operated by larger businesses, for example,
Cooperative convenience stores or WH Smiths. These larger businesses tend to have multiple
branches and are therefore called “Multiples”. The operating procedures at Multiples are
however also largely the same as those at Agency branches.
The Network Transformation Programme
3.33. The Network Transformation Programme (NT Programme) that is currently underway, is
seeking to change the way that Post Office services are offered in branches with particular
reference to the hours during which Post Office services and products can be provided.
3.34. Under the NT Programme, Agency branches are being transferred to either a “Main Branch”
model in which a dedicated Post Office counter, physically separated from the Subpostmaster’s
own retail business, will be maintained, or a “Local Branch” model which fully integrates Post
Office services within the retail business. This will allow Post Office services to be offered for
longer hours than before, and may help to resolve some of the issues about hours of opening,
end of day cut off procedures and the need to keep separate records where Post Office
products are sold from the retail business, for example National Lottery products.
The National Federation of Subpostmasters (the NFSP)
3.35. The NFSP is an independent organisation representing Subpostmasters in their dealings with
Post Office. Although not all Subpostmasters are members of the NFSP, it is the only
organisation recognised by Post Office to negotiate rates of compensation for branch services
on behalf of Subpostmasters nationwide. The NFSP works very closely with Post Office on a
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3.36.
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range of issues including security, operational systems and technology and its 24-hour helpline
provides advice on staff, contract and other issues, except for those relating to Horizon.
The Justice For Subpostmasters Alliance (the JFSA)
The JFSA has been instrumental in setting up the Complaint Review and Mediation Scheme
and is represented in the Working Group. Its role is to ensure that the process addresses
significant issues that have been raised by Applicants and moves them towards resolution.
4. Training, Support and Auditing
41.
4.2.
4.3.
44.
45.
4.6.
47.
This section summarises the various training, advice and support functions provided to
Subpostmasters and how these have evolved over the years. An overview of the Post Office
audit and investigation function is also provided.
NBSC
The Network Business Support Centre (NBSC) was established in December 1999 to provide
phone-based support to Subpostmasters and their staff. The hours during which this support is
available has changed over time.
The NBSC's mission is primarily to provide assistance to Subpostmasters with problems arising
from the processing of transactions carried out through Horizon, as well as how to deal with
mistakes and issues arising out of the monthly branch trading statement (see 8.8 and 8.9).
New NBSC staff themselves receive a four-week training course and ongoing training on new
products and services as they are introduced. Observations on the quality of support and
product knowledge are included in Part Two of this report.
Post Office currently employs the equivalent of 70 people within the NBSC to receive calls,
undertake second line support as required and carry out administrative roles, although the
number of staff actually on duty at any one time to receive calls will vary. The NBSC receives
on average approximately 1,700 calls a day. Potential peaks of call volumes to the NBSC have
been "smoothed" by spreading branches across four trading groups, such that required monthly
submissions from branches, with associated queries to the NBSC, do not all fall on the same
Wednesday evening in each month.
The NBSC operates a two-tier escalation process so that if the NBSC advisor is unable to initially
resolve the query/issue with the caller, the call is escalated to Tier 2 where more expert advice
can be provided. If this still does not resolve the issue, the Branch Support Team will decide if
further training or face to face branch support, which is outside of the NSBC's remit, is required.
We have been advised by Post Office that the performance of the NBSC staff is measured on
the time advisors take to answer the phone, referred to as a "Grade of Service", and we are
advised that the target is to answer 70% of calls within 30 seconds and to have no more than
5% of abandoned calls (i.e. where the caller hangs up before reaching an advisor). We are
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also informed that additional measures, including surveys of "Subpostmaster Engagement
Support Satisfaction", have recently been introduced.
4.8. We also understand that, in the event of a complaint about a specific issue, the NBSC’s target is
to resolve 95% of such complaints within 10 working days.
4.9. The use of these metrics to evaluate performance and any conclusions relating to the quality of
advice and support received from the NBSC and the Horizon Service Desk is dealt with more
fully in Part Two of this report.
Horizon Service Desk (HSD)
4.10. In addition to the NBSC, Subpostmasters can access Horizon On-Line Help and may contact
the Horizon Service Desk (HSD), which is operated by Fujitsu.
4.11. The HSD deals with technical issues concerning Horizon and in the event that a technical
issue cannot be resolved in a telephone call the HSD can arrange for an engineer to attend the
branch to investigate the issue further.
4.12. _Anumber of calls by Subpostmasters for support are apparently made to the wrong helpline
and have to be redirected. We have been advised by Post Office that approximately six
percent of calls received by HSD do not relate to technical issues and are transferred to NBSC,
whereas approximately two percent of calls received by NBSC relate to technical issues and are
redirected to HSD. We return to this issue and comment on possible reasons for this lack of
understanding by Subpostmasters in Part Two of this report.
Field Support
4.13. Post Office has a dedicated Field Support Team responsible for induction and on-going
transactional training for all Subpostmasters. Although the structure of the team has changed
over the years, it currently consists of 227 Field Support Advisors (FSAs) who, together with 18
Field Team Leaders (FTLs), provide training and support to branches. In addition, they deal with
Subpostmaster queries and carry out Audits - see below for further information and comment
on Audits.
4.14. The Post Office network of branches and Subpostmasters is currently managed as three
distinct groups. The first two of these groups, "The Top 2000" and "The Next 2000", are
individually managed with an apparent focus on sales potential and performance, rather than
providing operational support, although non-sales issues are addressed as required.
4.15. The third group are classed as “Branch Support”. They are not pro-actively visited and do
not have a Post Office employed manager assigned to them, resulting in their first point of
contact and support being the NBSC. There are a number of escalation points depending on
the nature of the issue and, ultimately, if the Subpostmaster experiences a problem that cannot
be resolved over the telephone, a visit by a Field Support Advisor can be arranged.
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4.16. As noted above, the Field Support Team is responsible for matters such as:
¢ Delivering classroom training to all new Subpostmasters and those who are going
through the NT Programme.
e Training on site following a branch transfer.
e@ Requests from branches for additional or remedial training by FSAs. NB The
Subpostmaster will normally receive the training and is then responsible for training his
or her own staff.
e Undertaking Compliance and Financial Audits, which can also include providing further
training to Subpostmasters on matters identified by such Audits. More than 3,000
Compliance and Financial Audits were undertaken in 2013 in addition to 2,873 Cash
Count and Stock Check Audits.
4.17. In addition to the Field Support Team, there are others within Post Office who provide
training and support, either on a face to face basis or remotely by telephone. These include
Mail Development Managers (for branches which receive a high volume of mail) and the Branch
Standards Team.
4.18. The Branch Standards Team was established in 2009 as a telephone-based intervention
team. The team regularly contacts branches regarding a wide range of performance issues and
errors, ensuring that the branch is aware of the correct operational procedures to follow.
4.19. There are a number of other teams across Post Office who may also come into contact with
Subpostmasters (such as product specific teams, for example the National Lottery team) and
who may, in some cases, recommend additional training. The Subpostmaster can also request
further visits and training from the Field Support Team.
Training
4.20. Post Office will typically provide new Subpostmasters with training both prior to and after
taking up their position in branch. Training can cover matters such as how to transact products
and services; reconcile the day’s transactions; “remming” in and out cash and stock (see below);
and despatching cheques to processing centres.
4.21. Subpostmasters are also advised on how to balance the branch on a weekly basis, roll over
into the next weekly balancing period and how to balance at the end of the monthly “trading
period”. As part of this training, Subpostmasters are shown how to verify transactions and the
cash and stock on hand if discrepancies arise; how to accept or to challenge Transaction
Corrections (see 7.30 onwards); how to make good any losses and gains; and how to raise
issues about errors/discrepancies.
4.22. As set out below the nature of this training has evolved over time and a summary of the type
of training that has been provided by Post Office in the past is set out below. In addition to on-
going training related to operational processes, specific training was provided as part of the
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introduction and implementation of the original Horizon system and then the migration to
Horizon On Line.
2001 - 2002
4.23. Classroom training was offered to new Subpostmasters followed by ten or eleven days of
onsite training and support. This would be followed by one day of follow-up support on how to
carry out balancing at the end of the trading period, referred to as “balance support”.
2003 - 2006
4.24. Between five and ten days of classroom training was offered to new Subpostmasters (the
training being optional) and five to ten days of onsite training and support was then given
depending on whether the classroom training was attended. This would be followed by a
further day of follow-up balance support.
2007 - 2011
4.25. New Subpostmasters received five, eight or ten days of training on foundation, sales and
other specialised modules. Six days of onsite training and support was provided, again
followed by one day of follow-up balance support. In 2007, after a pilot scheme, follow-up
telephone calls were introduced at intervals of one month and six months after a branch was
taken over by a new Subpostmaster, with a one-day site visit taking place three months after
the branch was taken over.
4.26. A Subpostmaster may choose not to attend training, or only attend part of a training session
if, for example, he or she has worked in a branch previously and therefore already knows how
to operate Horizon and carry out transactions. Once initial training has been provided, it is the
responsibility of the Subpostmaster to train his or her staff and ensure that updates or new
procedures are followed and communicated to their staff. Equally, it is for the Subpostmaster
to ask for further training and/or assistance if it is required.
4.27. In 2012, as part of the wider steps being taken to “transform” the network, Post Office
tailored its training to reflect the specific role being undertaken and rolled out further training
depending on, for example, the experience of the Subpostmaster, the type of contract they
would be operating and the number of employees they have.
4.28. The precise training given to a Subpostmaster therefore depends on a number of factors
such as whether the Subpostmaster is completely new to the role, whether he/she is taking
cover an existing branch with existing staff, the size of the branch, the branch operating model
(i.e. Main or Local) and the types of products and services to be transacted.
4.29. Post Office’s approach to structuring its relationships with Subpostmasters has evolved over
time.
4.30. Branch classifications, roles and titles have changed with Retail Line Managers and
Performance Advisors becoming Sales Managers and Area Performance Managers, who by
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2008/9 were replaced by Commercial or Community Business Development Managers. The
Business Development Manager role has itself now been replaced by an Area Sales Manager
function.
4.31. Also, in 2008/9, the transactional training teams, previously functionally part of Post Office's
HR department, were renamed as Network Field Support Advisors and the Financial Audit Team
was merged with the Network Field Support Advisor team. As a result, Field Support Advisors
now conduct both training and Audits in branches.
Auditing
4.32. In order to monitor and validate performance, Post Office will often conduct Audits of
branches. This allows Post Office to assure and verify its assets, which are held in branches and
to ensure compliance with regulatory and business requirements. The Post Office term “Audit”
as referred to in this Report is mainly used to describe a cash and stock count carried out solely
by Post Office, which may be supplemented by a Compliance Audit. In the event of a material
shortfall arising during an Audit, it is common practice for any Compliance Audit to be deferred.
4.33. A Subpostmaster with concerns relating to the results of a Post Office Audit may only use
the services of an independent auditor in order to verify the results if that auditor is given
access to the branch's secure area and to Horizon as a registered user. However that person
would only have access to the same data as that available to the Subpostmaster. Furthermore if
the Subpostmaster had been suspended they would not then be able to register that person
and give them access to Horizon or the branch's secure area.
4.34. Audits will normally take place:
@ When arisk at a branch has been identified (e.g. the branch is continually suffering
shortfalls);
@ On the appointment of a new Subpostmaster;
e On the transfer of the branch to a new Subpostmaster (a further audit will often take
place between six and nine months after the date of transfer); or
¢ Following a robbery or burglary (in support of loss mitigation).
4.35. Asitis not possible for Post Office to visit and carry out an Audit at every branch each year,
it also undertakes Audits whereby branches are selected at random to be audited. As well as
the normal cash and stock verification and evaluation of adherence to Post Office’s systems and
practices this approach also assists with the risk profiling of branches.
4.36. The precise nature of the Audit will depend on the reason for the audit being undertaken,
but will normally be restricted to a simple count of cash and stock. As such, it has only limited
value in investigating and understanding underlying causes of errors and losses.
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Within this context audits will usually include checks such as:
e For branches with paystations or lottery terminals, ensuring any overnight Transaction
Acknowledgements (see below) have been properly accepted;
Checking the cash declaration for the previous trading day;
e Counting and recording the amount of stock and the cheques held in the branch against
the record maintained on Horizon; and
e Verifying any foreign currency held in branch.
4.37. As noted above this may sometimes be supplemented by a Compliance Audit to ensure that
regulatory and business requirements are being followed. If compliance issues are identified
this may then be followed up by the Branch Standards Team who will assist the Subpostmaster
in rectifying the compliance issues. If an issue cannot be rectified by the Branch Standards
Team, the Team can arrange for a Field Advisor to visit the branch and/or for further training to
be provided.
4.38. The results of the Audit should normally be discussed with the Subpostmaster. In the event
5.
5.1.
5.2.
5.3.
of a shortage being identified, an audit may result in the Subpostmaster being asked to “make
good” the loss (i.e. to reimburse the loss to Post Office from the Subpostmaster’s own funds).
It may also result in a Subpostmaster receiving what is termed a “precautionary suspension”, of
both contract and remuneration. Further details of the treatment of shortages in other
circumstances and how they arise and can be addressed are set out in section 9 of this report.
Horizon and associated equipment
As an understanding of the operation of the Horizon system is fundamental to an appreciation
of many of the issues raised in the Complaint Review and Mediation scheme this section
provides a broad description of how Horizon (both the original version as well as the amended
version, known as "Horizon Online" or "HOL") is structured and operates, as well as giving
information relating to other equipment used in Post Office branches, including Automated
Teller Machines (ATMs).
Horizon is the electronic point of sale IT system used across all 11,500 Post Office branches to
undertake transactions (from selling stamps to cash withdrawals and currency exchanges).
Horizon supports approximately 30,000 terminals in branches , with 68,000 users having access
to the system. In 1995, Post Office commissioned the development of the original system from
the company now known as Fujitsu Services Limited and we are advised by Post Office that the
system has been accredited in accordance with the Payment Card Industry Data Security
Standard.
The whole, bespoke, system comprises the following elements:
e Computer hardware and communication equipment which is installed in each branch
including touch screens, counter terminals and printers;
© Central Data Centres where transaction data from every branch is stored;
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5.4.
5.5.
5.6.
5.7.
5.8.
5.9.
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¢ Control and monitoring systems; and
e = Testing and training.
The following brief description reflects the way in which the current version of Horizon, known
as "Horizon On line" or "HOL" operates. This was rolled out by Post Office in 2010 as part of its
Horizon Next Generation (often referred to as "HNG-X") Programme to provide a simplified
network based on the centralised processing of data. The main changes, compared to the
earlier Horizon system, principally affected the way in which each terminal communicates
transaction data to the central Post Office Data Centres and did not significantly impact on the
actual use of the system in each branch.
Prior to the introduction of Horizon On Line, the data relating to each customer transaction was
processed and stored by a designated master terminal in each branch before being transmitted,
in batches, to a central Post Office Data Centre. In the event of power or equipment failure at
a branch this could mean that transactions could be lost and would be subject to a recovery
procedure. Under Horizon On Line, each branch terminal now communicates directly with a
Post Office Data Centre on a transaction by transaction basis, which should reduce the potential
for transactions to be lost. This is explained more fully in the following section on
"Connectivity".
In order to function, Horizon must be "online" and each terminal connected to a Post Office
Data Centre via a secure communication line with a back-up system, provided by Post Office,
normally comprising a mobile phone connection. The Subpostmaster is responsible for the
provision of and payment for the communication line itself.
Transactions in Horizon can only be physically entered by someone with a user ID and an
associated password. Formal approval of a new user can only be carried out by Post Office but
new users can be added to the system and allocated a User ID by a Subpostmaster or other
person once that person has been set up with "manager access" by a Field Support Advisor .
Once a User ID has been allocated then the required associated password can be set either by
Post Office or by the Subpostmaster before being subsequently managed and changed by the
approved user.
Individual transactions are conducted through a series of "conversations", each of which has a
unique sequential serial number. Horizon records all data centrally in the Branch Database in
the Post Office Data Centre and a copy of all transactions is also made to a separate audit server
at Fujitsu where they are stored independently. Post Office has advised that a limited number
of security personnel at Fujitsu have read-only access to this audit server.
Post Office has additionally confirmed that it is their understanding that it is not, and never has
been, possible for anyone to access Branch Data and amend live transactional or stock data
without the knowledge of the Subpostmaster or their staff.
Financial data is stored by Fujitsu for a period of seven years, in line with Post Office data
retention policies, after which it is destroyed. This time limit as well as the available financial
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budget to process requests for information has, in some instances, posed serious barriers to
subsequent investigations.
5.10. In order to ensure the integrity of the data held in and processed by Horizon the system
operates a number of integrity checks. Examples of such checks include the following:
e Data passing from Horizon to third parties or to Post Office’s “back office” are driven
from one source to ensure that every recipient receives the same data.
Financial transactions such as banking withdrawals and card payments are automatically
matched against the view of the transaction held by the customer's bank (i.e. if £100
has been withdrawn at a branch, this will be recorded in Horizon and will be
subsequently matched against the bank’s record that £100 has been withdrawn). If
discrepancies arise they will be addressed following Post Office’s procedures as
described below.
Connectivity
5.11. Each Horizon terminal requires a direct connection, provided and paid for by the
Subpostmaster, to a Post Office Data Centre in order to process transactions and this Post
Office Data Centre in turn communicates with third parties (such as banks, the Royal Mail, DVLA
and local authorities) in order to complete transactions.
5.12. The communications equipment in each branch needs to be connected to both a power
supply and a communication channel in order to operate and process transactions.
Connectivity issues can arise and may cause operating difficulties and errors. For example,
when there is an interruption in the power supply or a breakdown in the communications line.
5.13. All Horizon transactions are conducted over a secure virtual private network between the
terminal in the branch and the systems within Post Office Data Centres, which allows private
data to be shared securely across the internet.
5.14. When serving a customer, transactions for some products can be completed within Horizon
and immediately send information directly to Data Centres during the transaction, whereas
some do not interact with the Data Centres until the customer transaction has been completed.
5.15. If there is an interruption to the power supply, there is a possibility that transactions may
not have been fully and properly captured at the Data Centre.
Horizon will normally check to determine whether there are any incomplete transactions
following an interruption and if possible will try to remedy the lack of data.
5.16. The user will be prompted, once the system is reconnected and the user is logged back on,
with a message containing instructions on how to recover the interrupted transaction. This
message should confirm whether the customer’s transaction was completed and whether any
payment needs to be received or made.
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5.17. The steps which need to be taken (as directed by Horizon) will depend on the type of
transaction being processed during the power or equipment failure (see 5.14).
5.18. Similarly, if there is an interruption to the communication channel and/or a failure to
automatically connect to the mobile phone backup device provided by Post Office during a
customer transaction, Horizon is designed to prompt the user with on-screen messages
explaining what to do and whether to cancel or retry the transaction.
5.19. _ If the Horizon messages are not clear or are not clearly displayed for sufficient time, and the
user does not follow the recovery instructions correctly, this can result in a failure to process all
or part of the customer’s transaction and later result in a balancing error.
5.20. We have been advised that Fujitsu (see above) has a process by which it proactively
monitors the primary and back-up connectivity between branches and Data Centres and, if
alerted to a connectivity issue, will normally investigate and try to resolve the issue as soon as it
is detected.
5.21. There is also a risk of hardware failure, but this should also be visible to Fujitsu and
depending upon the nature of the fault may in some cases require branch equipment
replacement (see Branch Error Analysis section below), referred to as “swap outs”.
Associated equipment
5.22. Within a Post Office branch there may be various pieces of equipment used to conduct
specific transactions. A description of the main items and the main operational requirements is
set out below.
Automated Teller Machines (ATMs)
5.23. In 2005, Post Office awarded a contract to Bank of Ireland to provide ATMs in its branches.
Bank of Ireland is a member of LINK (the UK network of ATM providers). It provides and installs
the ATMs in Post Office branches, delivers training and offers technical and maintenance
support. It is also responsible for the settlement process (between Post Office and each
customer's bank account) and handles customer queries about ATM transactions.
5.24. In support of the operation of ATMs installed in branches, Post Office provides cash (notes
which the ATM dispenses), while cash-loading, basic first line maintenance and associated
accounting are handled within each branch.
5.25. Oninstallation of an ATM, operational training is provided by Wincor, a sub-contractor to
Bank of Ireland. When responsibility for a Post Office branch, which already has an ATM,
transfers to a new Subpostmaster, ATM training is provided by Post Office as part of its
standard training package.
5.26. Each branch is also provided with a Bank of Ireland ATM Operator Manual on how to use the
ATM, which includes descriptions of how to load cash into the ATM, how to obtain the ATM
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cash dispensed "totals receipts” and how to use the ATM's Cash Management menu. Each
branch is also provided with "Accounting Instructions for Bank of Ireland ATMs" which explains
how activity on an ATM should subsequently be recorded in Horizon by the Subpostmaster.
5.27. Each day, the Subpostmaster must print from the ATM a “totals receipt” that provides the
number and value of withdrawal transactions and retracted cash transactions (where a
customer forgets to take their cash and it retracts back into the ATM). The data from this
receipt must be manually input into Horizon by the Subpostmaster or branch staff. In the rare
circumstance of a retracted transaction, the retracted cash must be physically removed from
the ATM by the Subpostmaster, counted, and the amount also recorded in Horizon so that the
customer’s account can be re-credited.
5.28. Once a week, the Subpostmaster should remove and count all the cash in the ATM and
manually record this figure in Horizon (in addition to recording the totals shown on the ATM
receipt as described in 5.27).
5.29. Part Two of this report comments in more detail on some of the operational aspects relating
to ATMs.
PayStation
5.30. A PayStation is a standalone payment device that allows branch staff, on behalf of
customers, to carry out certain bill payments, E-Top ups, as well as make electricity key and
Quantum gas card top ups.
5.31. _PayStation is predominantly used as a cash-only payment device although it does have the
facility to accept debit card payments. The PayStation equipment in each branch consists of
the main terminal along with a magnetic card reader and a barcode scanner, all of which are
provided by a separate company, Ignenico.
5.32. I PayStation works as a simple operational interface and is activated by either a barcode scan
or card swipe. The PayStation machine can also be operated manually. Once a transaction
completes, receipts are printed for both the customer and the branch.
5.33. PayStation transactions usually require third party authorisation. For example, a mobile
telephone top up request will go from the terminal to the mobile network provider, who will
then confirm that the mobile telephone network is correct, that the customer’s handset is a
prepayment device and will then issue a unique code allowing the branch to credit the
customer.
5.34. The Subpostmaster obtains from the PayStation terminal a daily record showing that day's
transaction totals. Overnight, the PayStation terminal reports the day's transactions to the
Post Office Data Centre which in turn sends a Transaction Acknowledgement (see 7.41 to 7.48)
to the branch. When logging on the next day, the Subpostmaster checks the Transaction
Acknowledgement against receipts and may then confirm the Transaction Acknowledgement,
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after which the branch's cash position on Horizon is adjusted accordingly to reflect the value of
the previous day's transactions.
Lottery
5.35. National Lottery products are provided and serviced by Camelot UK Lotteries Ltd. These
transactions are processed through a separate on-line terminal in each branch. This stand
alone Lottery or Camelot terminal is not directly connected to Horizon. The Lottery terminal
can be located behind the Post Office counter but in most instances, it is located on the retail
side of the branch.
5.36. National Lottery products are currently available in approximately 6,000 Post Office
branches with two thirds of annual revenue coming from sales of Lottery tickets and one third
from scratch cards.
5.37. The Lottery terminal is used for the sale of Lottery tickets and to activate scratch cards
before they are sold whereas the paying out of Lottery prizes and the recording of scratch card
sales is conducted on Horizon.
5.38. At the end of each trading day a daily summary of Lottery transactions for that day is printed
from the Lottery terminal by the Subpostmaster and retained in the branch (so that it can, if
necessary, be reconciled later against any Transaction Acknowledgements or discrepancies —
see below). Overnight, Camelot will send a data file containing details of all Lottery
transactions undertaken by the Lottery terminal to Post Office. This is used as follows:
Sales
5.39. The value of all online sales is sent to each branch overnight as a Transaction
Acknowledgement. Horizon assumes that all Lottery ticket sales are conducted for cash (as this
is the only method of payment permitted by Post Office for Lottery sales) and the Transaction
Acknowledgement therefore increases the amount of cash recorded in the branch accounts in
Horizon by the value of the sales conducted the previous day.
5.40. _ If the Lottery terminal is kept on the retail side of the business, and payment for Lottery
products is processed through the retail till point, the Subpostmaster must physically transfer a
corresponding amount of cash from the retail business to the Post Office branch's cash
holdings.
5.41. _ If the Lottery terminal is operated as part of the Post Office counter, then the cash payments
will already have been automatically recorded in Horizon.
Scratch card stock
5.42. Packs of scratch cards are sent to branches by Camelot. Before selling the scratch cards the
branch must record the receipt of the scratch cards so that they can be tracked within the
branch's stock holdings. This is done by ‘activating’ each pack of scratch cards on the Lottery
terminal, which allocates a unique identification number to each scratch card and scratch card
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pack. If a pack is not activated then Camelot may subsequently decline to pay out any prize on
any winning scratch card within that pack.
5.43. The overnight data file contains details of the number of scratch cards activated at each
branch. A Transaction Acknowledgment is then sent to each branch, which increases the
amount of scratch cards recorded on Horizon as being in the branch's stockholdings.
5.44. Before February 2012, this process was manual. The Subpostmaster was required to
activate scratch cards on the Lottery terminal and then manually record the new scratch cards
on Horizon as an increase in branch stock.
Prizes
5.45. Where a customer claims a prize on a winning Lottery product, the ticket or scratch card
must be scanned on the Lottery terminal to validate the prize. If the prize is less than £500, the
value is paid out in cash by the retail side of the business. If the value is over £500 then the
prize must be paid by a cheque generated by the Horizon terminal.
5.46. Where a Subpostmaster pays out prizes in cash from the retail side of the business, they will
be recorded on the daily receipt generated by the Lottery terminal. The Subpostmaster then
uses this information to manually enter the prize payouts in Horizon each day. By recording
prize payouts, the cash position in Horizon is reduced and the surplus cash should be physically
removed from the Post Office cash holding and transferred to the cash holding belonging to the
retail side of the business.
5.47. Post Office reconciles the prize payouts recorded on Horizon (both cash and cheque) against
the overnight data file from Camelot. Any discrepancies are corrected by way of a Transaction
Correction (see 7.30 onwards).
5.48. Scratch cards can be sold directly through the Horizon terminal or are permitted to be sold
from the retail side of the business and later recorded in Horizon. Sales conducted directly
through Horizon will automatically make the necessary adjustments to the branch's recorded
cash and stock holdings to reflect each sale.
5.49. _ If a Subpostmaster chooses to sell scratch cards from the retail business, a record of scratch
card sales has to be maintained so that at the end of each day the volume and value of scratch
card sales for that day can be manually input into Horizon.
Horizon will assume that all the sales have been for cash and hence the Subpostmaster must
also physically transfer the corresponding amount of cash from the retail business into the Post
Office cash holdings.
6. Horizon Double Entry Accounting
6.1. As well as processing transactions, Horizon is also an electronic accounting system which tracks
every transaction input to the system in a branch and ensures that relevant and correct double
entry bookkeeping is applied. Those transactions include both those recording sales and
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services to customers as well as deliveries of cash and stock in and out of the branch. Horizon
enables staff in a branch to run reports referred to as “Balance Snapshots” as and when
required, so that they can look up the recorded amount of cash and stock that is meant to be
on hand.
The system's core principle is that of double-entry recording (i.e. entries generally have a
corresponding and opposite entry so as to “balance” the account). For example, if a product is
sold for cash this should in most cases result in a reduction in a branch’s stock levels of that
particular product line and a corresponding increase in the amount of cash recorded as being
held at the branch.
A typical example of double entry would be the processing of a "personal banking" cash
withdrawal by acustomer. Horizon would record a credit (a reduction) in physical cash
holdings in the branch due to money being paid to the customer. It should also record a debit
in the payments section of the Balance Snapshot to reflect the debt now due to Post Office
from the customer's bank.
The effect of this double entry system is that an input in one part of the branch's accounts will
cause corresponding changes in other parts of the accounts.
Example:
A reduction in stock (e.g. postage stamps) held in a branch, following a sale, will
automatically increase the amount of cash by the same value, as Horizon will assume that
the stock has been sold.
So if, for example, stamps to the value of £10 were sold then this would be recorded in
Horizon with the value of the stock of stamps reducing by £10 and the amount of cash
recorded in Horizon automatically increasing by £10.
It will sometimes be necessary to manually adjust stock levels in Horizon (either up or down)
to reflect the reality of the amounts physically on hand in the branch. If however sucha
reduction in, for example, the stock of stamps was incorrect by £10, then when the amount
of physical cash actually held in the branch is compared to the amount of cash recorded in
Horizon, (assuming that all other transactions are perfectly correct) the branch will be £10
short.
In this way, the error in accounting for stamps has migrated across the accounts to manifest
itself as a cash shortfall.
However, the branch should also now be actually holding £10 more in stamps than the
amount shown in Horizon. This creates a "surplus" of stamps physically in the branch.
In this scenario, there is therefore no net overall loss. If identified by the Subpostmaster then
the error can be corrected by manually increasing the value of stamps recorded in Horizon by
£10, which will then automatically decrease the amount of cash recorded in Horizon by £10
(as Horizon will assume that as there are now more stamps in the branch, those extra stamps
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must not have been sold). This should bring in line (or "balance") the branch's accounts
recorded in Horizon with the actual cash and stock holdings in the branch.
Branch Operating and Reporting Procedures
In simple terms, most individual customer transactions are processed as follows:
e Accustomer approaches the branch counter and requests certain transactions;
@ The Subpostmaster selects the appropriate product or service on the Horizon terminal and,
if necessary, inputs the value of the transaction (e.g. cash withdrawal from a bank account of
£100);
e This process is repeated for each individual transaction requested by the customer (e.g. at
the same time as the cash withdrawal, the customer purchases £10 of stamps);
Horizon groups the individual transactions together in a “basket” of transactions and
displays the net amount to be paid to the customer or which needs to be taken from the
customer (e.g. in the above situation, the net cash due to the customer is £90);
© If payment is to be taken from the customer, the Subpostmaster will select the payment
method (e.g. cash, cheque, debit card, etc.). This is referred to as the Method of Payment
(“Mop”);
© The Subpostmaster takes the payment from the customer or pays out cash to the customer
as required. This final payment out or in (whether by cash, cheque or other method)
records a final line in the transaction record that offsets the net value of the transactions
and brings the basket total to zero. (e.g. If a customer buys £10 of stamps for cash the
stamps would show as a negative £10 and the cash received would show as a positive £10,
thereby bringing the basket total to zero);
The Subpostmaster completes the transaction in Horizon, which closes that basket from that
branch terminal and updates the branch's cash and stock records in Horizon (e.g. in the
scenario above involving a stamp purchase and cash withdrawal, the branch's cash will have
decreased by £90 and stamps also decreased by £10).
Whilst it might appear from the above scenario that any errors should be easy to identify, the
source of errors during a process may not always be easy to determine. The potential impact
and consequence of multiple transactions and associated issues is dealt with more extensively
in Part Two of this report.
For cash or cheque only transactions carried out in a branch, Horizon delivers and records the
entire sale or service to a customer, at the point of sale. For example, a bar-coded utility bill
payment, paid in cash, is completed wholly in Horizon, with no related paperwork to process
and no use of other terminals that are not connected to the Horizon system.
Some transactions, where the method of payment is a credit or debit card, require in addition
to Horizon, use of the LiNK banking system accessed through a PINpad terminal.
Other transactions also require the use of other equipment. Examples include Lottery ticket
sales and Scratch card Packs (see 5.35 onwards), which must be transacted on the separate
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Lottery terminal. Horizon is then updated the next day by Transaction Acknowledgement as
explained below.
7.6. There may also be various other steps (e.g. completing and sending various receipts and
paperwork) that the Subpostmaster needs to take to complete the transaction, which are
specific to the product in question, such as Motor Vehicle Licences.
Stock units
7.7. There is a capability within Horizon to create "stock units". These are in effect separate ring-
fenced sets of sub-accounts within the branch's general account in Horizon. Although there are
no mandatory business requirements for how many stock units a branch has to have, or how
they are physically deployed, the creation of a stock unit by a Subpostmaster will cause Horizon
to create a separate sub-set of accounts connected to that stock unit.
7.8. If cash and stock are transferred from the main branch stock to a stock unit, this cash and stock
is then recorded in a separate set of accounts for that stock unit (and correspondingly removed
from the general branch accounts).
7.9. When a member of branch staff is preparing to serve a customer, they will log onto Horizon
with their User ID and password and link themselves to a specific stock unit.
7.10. Any transactions conducted will then be recorded against that stock unit, with the
corresponding changes to cash and stock levels being recorded against that stock unit's
accounts.
7.11. One of the reasons for using multiple stock units is so that the branch can operate
“individual” stock units, with each member of staff being allocated their own dedicated stock
unit. The person allocated a stock unit normally has a separate drawer in which to store cash
and stock associated with that stock unit so that it is physically separated from the cash and
stock in other stock units or in the general branch holdings. When branches have balancing
problems, it is normally recommended to adopt this approach so that mis-balances and
mistakes can be linked to specific individuals.
7.12. Some branches operate “shared” stock units. In effect, this means that all the branch staff
serve customers from one pool of cash and stock with all transactions then being recorded
against one set of accounts. While seemingly simpler to operate, this does mean that
discrepancies cannot be linked to individual User IDs.
7.13. Stock units can or must also be set up for individual product categories (e.g. Lottery, ATMs,
etc.). This can help the Subpostmaster record all transactions for a particular product within a
separate set of accounts so that any discrepancies can be more easily identified.
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Reconciliation with third parties
7.14. A number of the products and services available at Post Office branches are provided by
third parties (see Appendix 2). N.B. These third parties are often referred to by Post Office as
"clients".
7.15. When such a product is transacted, details of this transaction are communicated from
Horizon to the third party, sometimes immediately or sometimes at a later stage, by the central
Post Office finance systems. Post Office is then liable to pay the third party the transaction
value (or vice versa). An example of communication from Horizon to a third party with respect
to a single transaction would be as follows:
Example:
At Post Office branches, a customer can deposit cash in or withdraw cash from his/her bank
account with a number a major banks (i.e. Lloyds, Santander, HSBC etc.).
If a customer wishes to withdraw £100 of cash from an account, Horizon connects to the
customer's banking system to confirm that the cash is available for withdrawal.
Once authorised, Horizon will advise the Subpostmaster to proceed with the transaction and
to give £100 in cash to the customer (assuming that there are no other transactions in the
basket). The amount of cash recorded in the branch's accounts in Horizon would then be
automatically reduced by £100 to reflect the withdrawal. In this way, the branch’s accounts
are kept in balance with the amount of cash actually on hand.
Likewise, the customer's account at the customer's bank should be reduced by £100 to reflect
the cash withdrawal from the Post Office branch.
Post Office then obtains its money back from the relevant partner bank by way of the
settlement activities administered by the Post Office Finance Service Centre (FSC).
This process would happen in reverse for a £100 deposit into a bank account, with the result
that the cash position in Horizon at the transacting branch will be increased by £100, the
branch holding £100 more cash on hand and Post Office making a later payment to the
customer's bank of £100.
Remittances
7.16. Branches send or receive cash and stock to and from Post Office Cash Depots. This
movement of cash and stock is called a "Remittance" (and is often referred to as "Remming in"
or "Remming out").
7.17. Branches may also take cheques as a method of payment from customers for some
transactions. These cheques are treated as a “stock item” in Horizon and require “Remming
out” (i.e. sending) to the cheque processing centre.
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7.18. Post Office monitors the cash levels of each branch and classifies them as either “cash
surplus” or “cash deficit” in terms of cash management.
7.19. Those branches that are classed as “cash surplus” normally have more customers who make
deposits (i.e. by making cash deposits to bank accounts or by buying products with cash) than
customers who require cash withdrawals.
7.20. The “cash surplus” branches do not require cash remittances to be sent to the branch from
Post Office, as they will have a net inflow of cash from customers. These branches are however
required to return surplus cash to their nominated Post Office Cash Depots via a Cash Vehicle in
Transit (a secure means of transporting cash) in order to prevent the branch holding too much
cash on site. Post Office Cash Depots are placed in geographical locations around the UK and
each branch will be “tagged” to a particular depot.
7.21. Conversely “Cash deficit” branches are those where the money deposited by customers to
the branch does not usually cover the amount that the branch has to pay out. These branches
rely on Post Office Cash Depots to send cash to the branch in order to ensure that there is
sufficient cash in the branch to meet its needs.
7.22. Post Office’s Retail Cash Management team are responsible for monitoring the cash levels
within the branch network to ensure that branches have enough cash to serve customers and
to support effective working capital management for the network.
7.23. I The decision on how much cash a branch needs to “Rem” in or out is determined by Post
Office’s Flexible Planning System, a software tool used by the Retail Cash Management Team.
In essence, it compares the cash declaration figures that are entered into Horizon by
Subpostmasters against the sales (receipts and payments) information. It also takes account of
the average transactions occurring over the previous six weeks trading history to identify how
much cash the branch should return or send back on their next scheduled cash delivery. This
information is communicated to Subpostmasters via Horizon using a Flexible Planning Advice.
The Subpostmaster has the option to amend the amount of cash that is planned to be returned
by or sent to the branch by contacting the Retail Cash Management Team.
7.24. Where cash is to be “Remmed out” to a Post Office Cash Depot, the branch is responsible for
placing the correct amount of cash into a remittance pouch, entering the amount that is being
“Remmed out” into Horizon and then either handing the remittance pouch to the Cash in
Transit Driver, or sending it back to Post Office via Royal Mail Special Delivery. When the
“Rem” is processed the amount of cash recorded in the branch accounts in Horizon will
decrease to reflect this.
7.25. Where cash is “Remmed in” to a branch, the cash remittance is sent by Post Office to the
branch either via a Cash in Transit Driver or via Royal Mail Special Delivery. The branch is
responsible for checking that the remittance pouch contains the amount of cash as stated on
the remittance and then logging the receipt of cash into Horizon. This will increase the amount
of cash recorded in the branch accounts in Horizon.
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7.26. Royal Mail Special Delivery is only used, on a risk-assessed basis, for lower value remittances
and, for example, where logistics constraints prohibit the use of the large, heavy armoured cash
delivery vans.
7.27. Cheques have to be “Remmed out” daily by branches. This is to enable overnight
processing and next day "clearing” of the cheques by the relevant bank. The only exception is
cheques received on Friday and Saturday, which are sent together on the following Monday, as
Saturday is not a “banking day”.
7.28. There are dedicated Horizon processes, batch control vouchers and special envelopes which
branches should use as part of standard end of day procedures. These utilise normal mail
collections provided by Royal Mail employees.
7.29. Post Office contracts with a banking industry cheque processing organisation which
validates, on behalf of Post Office, cheques received; highlights any anomalies to the Post Office
FSC; submits the paper cheques to the drawee bank if required and provides data to the FSC
about cheques both successfully processed and those that have “bounced” (unpaid cheques).
Transaction Corrections
7.30. The FSC (often referred to as “Chesterfield” by Subpostmasters because of its geographical
location) is the Post Office's “behind the scenes” accounts processing centre. It provides daily
services to third parties, branches, Multiples and customers.
7.31. The FSCis the originator of Transaction Corrections (TCs). These are sent overnight by the
FSC to branches when errors are found which have either not been identified by the branch or
have not been resolved locally. Even if the branch's accounts are in balance (i.e. there is no
discrepancy between cash and stock on hand and the cash and stock levels in Horizon), it may
be that the branch has processed transactions erroneously or in a way that causes a Post Office
third party to refuse to reconcile the transaction with Post Office, thereby causing a
discrepancy.
7.32. TCs can be issued to rectify accounting errors arising from a wide range of issues including
errors or omissions in data entry such as mis-keying or not entering the transaction date.
Subpostmasters are provided with a list of the different types of TC and reasons for their
issuance.
7.33. Accepting a TC may result in a surplus or a shortage at the branch, or the correction of a
previous surplus or shortage. Any residual surplus or shortage should be withdrawn or made
good, as described in more detail in section 9.
7.34. Branches are required to accept all TCs notified to them, before completing their monthly
Branch Trading Statement (see 8.8 to 8.10). This is a contractual requirement. The branch
does not have to accept the TC immediately on receipt and can instead print the Transaction
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Correction narrative and if possible take the necessary action within the days remaining until
that trading period ends.
7.35. As explained below, Subpostmasters may also dispute the TC if they fail to understand the
error made or consider that the TC does not properly apply to them. Hardcopy evidence of
how the error has occurred is provided together with contact details to allow further
information to be obtained.
7.36. TCs are often followed by enquiries to the branch, particularly if a large number of TCs are
7.37.
7.38.
being sent to that branch.
In 2012/13, the most common reason for TCs being issued to branches was due to errors in
“cash remittances from branch".
Example:
A branch records remitting out £10,000 in cash and sends the cash pouch to the cash centre.
However, upon opening the cash pouch at the cash centre the pouch contains £10,010.
This creates a surplus at the cash centre and (assuming the branch otherwise balances) the
branch will show a £10 shortfall during the next cash declaration.
The FSC will then raise a credit TC to the branch to correct this shortfall. When the branch
formally accepts the TC, it will have the effect of reducing the reported Horizon cash balance
by £10 in line with the reality of the cash on hand. The double entry to this is to increase the
values recorded as “Remmed” out. The branch should then balance in respect of this specific
incident.
The generation of a TC may be due to a discrepancy between Horizon and a third party's
records and hence the time taken to identify errors and subsequently generate that TC can
sometimes be outside of Post Office's direct control.
Example:
A customer deposits £100 into his/her bank account but, through a keying error, the branch
only records a deposit of £10 in Horizon.
In this scenario, the records in Horizon and at the customer's bank will match as both will
show a £10 deposit. The branch will have a £90 cash surplus, because the branch will have
taken £100 from the customer, but only recorded the receipt of £10 in Horizon. The
customer may then raise a complaint with Post Office directly or with his/her bank who will
then contact Post Office.
Equally should the branch mistakenly record a deposit of £1,000 rather than £100 this would
generate a shortfall of £900, which the Subpostmaster would have to pay to Post Office
unless the customer detects the error and returns to notify the branch.
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7.39.
7.40.
7.41,
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Processing a TC often results in an adjustment to the cash or stock position at the branch
within the branch's accounts as TCs can debit or credit the branch's cash figure in Horizon. It is,
however, important to note that this often (as the name implies) corrects the recording of a
transaction such that the reported balance in Horizon will align with the physical cash handled
in the transaction.
Example 1:
If a branch processes a bill payment of £100 as £10 in Horizon, the branch would show a cash
surplus of £90. If the customer subsequently receives a bill reminder that full payment has
not been received they will normally contact Post Office to resolve the issue. When the error
has been identified, a debit TC is issued to the branch in the next trading period, because Post
Office will need to pay an additional £90 to the customer’s service provider. When the
branch processes the debit TC this will increase the branch's cash position in Horizon, thereby
creating a £90 shortfall against the cash on hand. This shortfall however sets off against the
corresponding surplus that would have been made in the previous trading period.
Example 2:
A customer presents a Transcash deposit slip to make a bill payment but during the
transaction it is established that an appropriate method of payment is not possible (i.e. the
customer’s debit card is declined) so the transaction is not recorded in Horizon and no cash
changes hands.
If the branch incorrectly retains the deposit slip and does not follow the correct end of day
procedure this could result in the Subpostmaster sending the slip to Santander (who
administer Transcash bill payments taken through Post Office branches) who would then
process the bill payment (i.e. money is paid from Post Office's account to the customer's
service provider's account).
When Post Office later reconciles the bill payment against the Horizon records, there will be
no matching payment record in Horizon and a TC will be sent to the branch. If the branch
accepts the TC, this will alter the branch's cash position and the relevant cash should then be
put in the till at that point. If the money is not put in the till, then there will be an equivalent
shortage at the end of the trading period.
TCs can be disputed with the FSC. If the TC dispute is upheld then a compensating TC will
be issued to the branch. If it is not upheld a written appeal can be made to the relationship
manager in FSC who will review the case and make a final decision. Any payment required
from the Subpostmaster as a result of the disputed TC will be suspended until the review is
completed.
Transaction Acknowledgements
Some Post Office transactions, for example, Camelot/Lottery, PayStation, or Post & Go are
not transacted through a Horizon terminal but instead use separate equipment (see section 5).
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7.42. However, the cash taken for these transactions by the branch needs to be accounted for in
Horizon as part of the overall branch cash and stock holdings. A Transaction Acknowledgement
(TA) is therefore used to ensure that Horizon can be synchronised with the records on the third
party equipment.
7.43. Transaction Acknowledgements (TAs) were introduced to automate the process of
reconciling the data being sent directly from the separate machines and the amount of cash
that should be processed through Horizon.
7.44. The transactions for certain Camelot products, PayStation and Post and Go are processed
overnight and a report of the volume and number of transactions is sent by the third party
equipment to Post Office. Post Office then sends the TA overnight to the branch confirming all
transactions that took place on the third party equipment during the previous day. For
example, National Lottery tickets (not scratch cards) are sold to customers via the National
Lottery terminal.
7.45. The data from these sales goes straight to Camelot and the branch takes payment for the
ticket and puts the cash into a separate drawer on the National Lottery terminal. The following
day, the branch's Horizon terminal will be sent an electronic TA, which will appear as a message
for the first person who logs onto Horizon asking for confirmation that it is correct. Once
accepted the TA will make the required adjustment to the branch's accounts and inform the
Subpostmaster how much cash should be transferred from the National Lottery till drawer to
the Horizon terminal drawer.
7.46. Prior to TAs being launched in 2012, the Subpostmaster would have to obtain the relevant
print outs from each machine and then input these figures into Horizon and manually reconcile
any cash owed. The launch of TAs removed this manual process and hence also removed a
source of error.
7.47. Evenwith the TA process, errors can occur if the correct amount of cash from the Lottery
terminal is not transferred to Post Office, or if the user accidentally pays the cash amount into
the wrong stock unit. Alternatively, if the Subpostmaster accepts the TA but does not pay in
the relevant cash then there will be a shortage.
7.48. The most important operational aspect of the TA process is that a TA has to be formally
"accepted" in Horizon, normally at the start of daily trading.
8. Branch Reporting and Management
8.1. As part of a branch’s standard operating procedure, Subpostmasters are required to produce
and review a number of in-branch reports to ensure that the branch is functioning effectively
and to allow Post Office to monitor cash and stock levels against its records. These include:
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8.2.
8.3.
8.4.
8.5.
8.6.
8.7.
8.8.
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Daily Cash Declaration
Staff at each branch are required to count and declare the amount of cash on hand at the end
of each day. The actual cash on hand is recorded in Horizon by the Subpostmaster or his/her
assistants. If there is a difference then Horizon will show any "discrepancy" between the cash
on hand and the amount of cash that should be in the branch in order for the branch to
balance.
Post Office provides a set of tools that can assist Subpostmasters with tracing or identifying
discrepancies. For example, transaction logs can be run which show the transactions that have
taken place. These logs can be searched using parameters such as product type, user and time
of the transaction. Event logs also provide information about user activity and a "Balance
Snapshot" shows what Horizon believes to be the state of the branch’s accounts at that point in
time. The availability and general use of these tools to ascertain what transactions have taken
place in branch and the amount that has been recorded against each transaction is commented
on further in Part Two of this report.
Before Horizon Online was implemented, Horizon reports were available in branches for 42
days. These reports are now available in branch for 60 days.
Weekly Balance
Post Office recommends that, every week, a branch undertakes a full cash and stock count.
The actual amounts of cash and stock on hand can then be compared to the figures recorded in
Horizon. This should help the branch to identify and correct any discrepancies in a timely
manner before they become combined with others and hence become more difficult to isolate.
In the event that a surplus or shortfall is found on a weekly balance, it can be declared and
transferred into a suspense (or Discrepancy) account pending resolution by the month end.
Amounts are typically held in suspense for a few days or weeks to allow the Subpostmaster
some time to try to resolve the discrepancy. In the event that the discrepancy cannot be
resolved by month end then, if the amount is less than £150, the Subpostmaster is expected to
“resolve locally" i.e. make good from his/her own funds. If the amount is greater than £150
then it can be settled centrally as explained more fully in the following section.
The Daily Cash Declaration and the Weekly Balance are tools that Subpostmasters can use to
manage their branches. Declaring a loss or surplus through either of these reports does not
trigger any action by Post Office at that stage.
Monthly Trading Period Rollover
This is similar to the Weekly Balance but is mandatory every month. It requires any
discrepancies (including those put into suspense during the month) to be resolved. This
process is also called "rolling over" or the "end of trading period" process. At the end of the
monthly process, the Subpostmaster is required to produce a Trial Balance, which should be
retained in the branch and used to compare to the physical cash and stock on hand. After
making adjustments to make good any losses or reduce any surpluses, the Subpostmaster then
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has to print off and sign a "Branch Trading Statement". This statement confirms that the cash
and stock shown in the accounts match the cash and stock actually held in the branch (with any
discrepancy having been declared — see section 9).
8.9. Subpostmasters are contractually required to complete a monthly balance as described above.
If a branch does not roll over into the next trading period when they are scheduled to do so,
Post Office will instruct the branch to rectify the situation. Failure to roll over at the end of
each trading period constitutes a Breach of Procedures as set out in the Subpostmaster’s
standard contract. In the event of a Subpostmaster failing to roll over he cannot open a new
trading period. However, it is possible for the branch to continue to trade, albeit in the current
trading period.
8.10. In order to address discrepancies or Transaction Corrections, the Subpostmaster should
follow the processes set out below. This should allow an issue to be resolved or to be further
investigated by contacting Post Office's Finance Service Centre (FSC). In the case of a further
investigation, a disputed item remains suspended until the Post Office has investigated the
matter.
Cut off routines
8.11. Mandatory daily and weekly “cut off routines” are in place to enable branches to validate
transactions, which should ensure that the paper records match Horizon. This also assists in
the identification of errors before month end. Examples include, validating the physical
cheques held in branch against Horizon to send to clearing or the banking summaries to send to.
Santander. Validation of physical records against Horizon's records can also help detect errors
or omissions but only if the nature of the error is understood.
9. Resolving surpluses or shortfalls of cash or stock
9.1 At the end of a monthly trading period the Subpostmaster is required, subject to one exception,
to certify that the branch has the cash and stock which Horizon states should be present.
9.2 The one exception relates to a shortage. If the Subpostmaster has less cash or stock than
Horizon states then, if the shortage is not made good there and then, the two options of settling
centrally as set out in (9.5) below are available.
9.3 It follows, that if the Subpostmaster has more cash and stock than Horizon states, then the
Subpostmaster does not owe that surplus to Post Office.
9.4 For stock discrepancies, the Subpostmaster should process a sale, a sales reversal or a manual
adjustment to correct the volume of stock shown in Horizon, to make sure that it balances to the
volume of stock actually held in the branch.
9.5 If, following the monthly rollover, there is a shortage of cash (when the cash on hand is less than
the amount of cash recorded in Horizon), then Horizon presents the Subpostmaster with three
options to remedy the deficiency:
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Make good — the Subpostmaster can elect to put cash or a cheque into the branch from
his/her personal funds to make up the shortage.
¢ Settle centrally and pay — the shortage is transferred to the Subpostmaster’s personal
account with Post Office. The cash figure in Horizon is reduced to bring it in line with
the actual cash on hand at the branch. At this point, the Subpostmaster owes the cash
loss to Post Office as a debt. This debt can be repaid by either (a) a direct payment from
the Subpostmaster to Post Office or (b) by deductions from the Subpostmaster’s future
remuneration although in this latter option the Subpostmaster may not commit more
than 25% of his/her net pay to such deductions.
e Settle centrally and dispute the shortage - if the Subpostmaster believes that the
shortage was not his fault or could be resolved through other means, then the debt will
be suspended to allow time for the shortage to be investigated and remedied. The
Subpostmaster can dispute a shortage by contacting the Network Business Service
Centre, Cash Centre (for remittance disputes) or the Finance Service Centre at Post
Office to have the debt suspended pending an investigation. The extent to which
Subpostmasters are aware of and make use of this third option is explored more fully in
Part Two of this report.
Part Two of this report will also make reference to situations where certain
Subpostmasters claim to have been under pressure to declare a balance of cash and
stock in branch, which did not reflect reality.
9.6 If the cash on hand ina branch is more than the amount that Horizon shows should be present
9.
9.
Ny
0
then the actual cash needs to be adjusted in order to balance the books. The Subpostmaster will
reconcile the amount of cash on hand at that moment in the Trial Balance process described in
8.8 above and then remove sufficient cash to bring the branch back into balance (see comments
in 7.30 onwards describing the Transaction Correction process). This results in Subpostmasters
being entitled to withdraw cash to remove surpluses, without the need to report that to Post
Office, other than through the Trial Balance.
Itis common practice for Subpostmasters to keep surplus cash in a separate location (such as
the retail business safe) until their investigation into the gain is completed and/or a Transaction
Correction is received. In the event that a declared surplus is eventually determined to be a
genuine one then the Subpostmaster is entitled, under the terms of the standard
Subpostmaster's contract, to retain it.
If however a Post Office investigation does not fully eliminate carelessness, negligence or error
then the Subpostmaster is liable for the loss and is required to personally settle any amounts
due. In order for the Subpostmaster to challenge this liability, the burden is on the
Subpostmaster to determine the source of the error and deficiency.
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10. Branch Error Analysis
10.1. This section describes how some errors might occur and what facilities are available to a
Subpostmaster to identify or correct those errors.
10.2. There are a variety of reasons why a branch may encounter a discrepancy between the
amount of cash and stock on hand and the amount of cash and stock recorded in Horizon — this
situation is commonly referred to as a "balancing discrepancy".
10.3. There are number of situations in which a balancing discrepancy might occur. It should be
noted that some of the situations described may cause a gain for a Subpostmaster, or only
cause a temporary loss and may cause the real reason for the losses to be hidden:
¢ If an error causes a surplus of cash in the branch, this may offset other losses caused by
other errors. In that scenario, the other losses or errors may not be revealed, as overall,
the branch’s accounts may balance, show a surplus, or a smaller loss;
e If asurplus error occurs in one month but is later discovered and corrected viaa TC ina
subsequent month, and the accounts for that month may show a loss even though all
transactions in that later period have been processed correctly.
Example:
A branch suffers two errors, one creating a £100 gain and another causing a £100
loss. At the end of the trading period, the branch's accounts will balance as the two
errors cancel each other out for balancing purposes.
If in the next trading period the cause of the surplus error (i.e. the gain of £100) is
discovered, a Transaction Correction (TC) will be sent to the branch which increases
the amount of cash recorded in the branch accounts. If all the remaining
transactions throughout the rest of that trading period are conducted correctly the
branch will still show a loss at the end of the later trading period due to the TC.
Therefore, whilst the loss of the branch shows in the current trading period, the error
which caused the loss occurred in the previous trading period.
10.4. A number of the errors as described below may only be visible to those working in the
branch. When discrepancies occur, Post Office normally seeks to find possible explanations
other than those below. If no other source of the discrepancy can be found and system error
can be eliminated or discounted then, by a process of elimination, the discrepancy will have
most likely occurred through an error in the branch.
Mis-key
10.5. A mis-key is the term used when staff enter the wrong value of a transaction into Horizon
compared to the actual amount of the transaction.
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Example:
A personal banking customer wishes to deposit £1000 into his/her account and the person
serving the customer mistakenly enters £10,000 but only £1000 cash is taken from the
customer. This would create a shortage of £9,000 for the branch.
In order to rectify this mistake, the Banking Team within the FSC has to contact the
associated client bank which in turn will contact its customer. The customer will then be
asked to confirm the amount deposited at the branch. However, the only receipt printed
from Horizon will have been given to the customer and will show a deposit of £10,000
and, therefore, the rectification process relies largely on the actions of the customer and
their bank.
10.6. As aresult, an easy to make keying error, by branch personnel, could result in a customer
enjoying a windfall benefit, with the Subpostmaster having to make good this discrepancy.
Mixing retail and Post Office business
10.7. Generally, a branch will maintain a physical separation between retail and Post Office cash.
Mixing these two sets of cash can lead to Post Office cash being lost to the retail business and
vice versa as it can become difficult to track the amount of cash that should be allocated to the
Post Office and retail sides.
Errors in cash handling
10.8. At the end of a customer transaction, payment normally needs to be made to or received
from the customer. Even if the transaction is correctly recorded in Horizon, branch staff may
take or hand out the wrong amount of cash. This error could be as simple as miscounting cash
before handing it to, or receiving it from, the customer.
Example:
A business-banking customer may present documentation to deposit £1000 into his/her
business banking account.
If, at the end of the transaction, £1000 in cash is given to the customer instead of taking
£1000 in cash from the customer there will be a shortage to the branch of £2000, made
up of the deposit entry of £1000 being correctly input into Horizon (Horizon then expects
to receive £1000) and the settlement out to cash of a further £1000 which will reduce
the cash in branch.
10.9. In many cases the honesty of the finder and the ability to identify the money as coming from
the branch is required if the money is to be returned to the branch.
Miscounting cash on hand
10.10. Cash must be physically counted at the end of each day and when rolling over at the end of a
trading period. When completing the physical cash count, notes and coins can sometimes be
miscounted or missed altogether.
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10.11. If cash is temporarily mislaid one day and found the next, it can lead to related shortages
and surpluses on different days or in different trading periods. In the midst of many other
activities, branches may not associate the two and may dispute part or all of the outcomes.
10.12. Another instance of where this can happen is when a Post Office product is sold on the retail
side of the business. Most Post Office products must be sold from the Post Office counter in
the branch premises. A few Post Office products, such as National Lottery scratch cards, are
permitted to be sold from the retail business. However, it is the Subpostmaster’s responsibility
to make sure that any cash taken from the sale of such products is transferred from the retail
business to the Post Office side, and properly counted in any cash declaration.
10.13. Cash remittance pouches that have been prepared for the Cash in Transit collection drivers
may be erroneously counted as part of the cash declaration. Horizon does not include this
amount within the cash holding figure (as it is deemed to have been remitted out of the branch
even if the pouch has not yet been physically collected) and, therefore, the branch could be
declaring a gain or inadvertently hiding a loss.
Cash remittance errors
10.14. If there is mistake made between the amount that is “Remmed” in or out and what is
received from, or sent to, the Post Office Cash Centre, then this will lead to a branch
discrepancy. When a pouch is received from a branch, the handling clerk at the Cash Centre
opens the seal and empties the contents onto their workstation, which is monitored by CCTV.
This is the same for pouches that are made up in the Cash Centres and sent to branches.
Example:
If a branch has bagged up £25,000 to send to the Cash Centre but enters £20,000 into
the system then there will, in the short term, be a shortage of £5,000.
If the cash has left the branch then the mistake cannot be rectified by the branch. The
cash will be counted at the Cash Centre and a Transaction Correction will be sent to the
branch to rectify the branch account.
Stock remittances
10.15. Branches receive their stock (postage stamps, Motor Vehicle Licences, etc.) from Post Office
either via Cash in Transit or Royal Mail Special Delivery. The branch is responsible for checking
at the earliest possible opportunity that the amount of stock received exactly matches the
advice note delivered with the order and “remming” the stock onto the correct lines in Horizon.
10.16. As the delivery can often occur during branch opening hours it may be impractical to carry
out a full check immediately as to do so in an effective manner could require the branch to be
closed for a period. In these circumstances an immediate cash count would not be carried out
on delivery of the cash unless it was required immediately for operational purposes.
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Cheque handling
10.17. Branches can accept cheques as payment for certain products and services. Customers can
also cash personal cheques up to a certain amount. Branches may also accept deposits for
certain partner banks.
10.18. There are set procedures that must be followed in branch at the end of each day to ensure
that the cheques are handled correctly, the customer's bank account is debited accordingly and
Post Office can settle the client accounts. Typically there are two scenarios which might cause
a loss:
e Acheque has been accepted for a non-cheque acceptable product (i.e. foreign exchange
sales). By accepting payment by cheque for a non-cheque acceptable product, it may
not be possible to link a missing cheque to a transaction record. This is because the
Subpostmaster may have taken the cheque for payment from the customer, but
because the product did not permit cheque payment, Horizon would not present this
option on the counter terminal. The Subpostmaster would therefore have to
erroneously select another payment option (i.e. cash).
e@ The method of payment has not been correctly recorded in Horizon.
Example:
If a cheque is presented by a customer to pay for a transaction, but the transaction is
accidently settled as a cash transaction, the value of cheques held in the branch
recorded by Horizon will not match the value of the actual cheques held in the
branch.
At the end of each day a cheque listing is printed from Horizon, which should be
checked against the cheques held in branch and if it does not match, Horizon should
be corrected before remitting the cheques to Post Office. After “Remming out” the
cheques, a further cheque listing should then be printed to confirm that no cheques
are held in branch.
If a branch has not ensured that the cheques in branch match Horizon’s record
before “Remming out” those cheques, then the cash in the branch will show a
shortfall and the amount that is received at the cheque processing centre will not
match the amount that has been entered into Horizon. This is because Horizon
calculates how much cash should be in a branch based on the “cash” settlement
option that is available at the end of each transaction. Therefore, if the “cash”
option has been selected instead of the “cheque” option, Horizon will expect there to
be more cash in the branch than is actually held.
This may generate a Transaction Correction to correct the account unless the branch
reverses the transaction and records it accurately as a cheque transaction.
10.19. Branches should follow a process to ensure that the amount of cheques recorded as held in
branch balances to zero. This process is called “cutting off”. If the cheques are not “cut off” at
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the end of the day the cheque listing on the following end of day procedure will not agree with
the actual value of cheques held in branch.
10.20. This is corrected in the same way by amending the “cheque on hand” figure to show the
correct value of the actual cheques held in branch. The value of the cheques in branch is then
sent out before a further cheque listing to confirm a zero entry is printed.
10.21. It is Post Office policy that a branch will only bear the cost of a lost cheque if the branch has
not followed proper procedures. If the root cause of a lost cheque is unknown or attributed to
some other cause outside of the branch, Post Office will normally absorb this loss and not pass.
it on to the Subpostmaster. In the majority of cases, Post Office either mitigates the loss
caused by a lost cheque by obtaining a replacement cheque from the customer or absorbs the
loss itself. Only a small number of missing cheque cases result in TCs being issued.
Accidental loss
10.22. Other losses may occur accidentally in branches. For example, money dropped in bins with
rubbish, money dropped or knocked into mail bags, and money left on counter tops taken by a
customer without branch knowledge.
Transacting from the wrong stock unit
10.23. As noted in 7.7 to 7.13 above there is a capability within Horizon to create "stock units",
which are, in effect, "virtual tills". A member of staff within a branch, when serving a customer,
will log onto Horizon with their own User ID and password and can tag themselves to a stock
unit containing cash and stock (either their own individual stock unit or a shared stock unit).
10.24. If a user accidentally links or tags to the wrong stock unit and serves a customer or transfers
cash or stock, then the accounts will record the transactions against one stock unit but the
physical cash or stock will move in or out of a drawer allocated to a different stock unit. Any
transactions carried out will then be recorded against that stock unit, with the corresponding
changes to cash and stock levels being recorded against that stock unit's accounts.
10.25. If spotted, then this can be corrected by either reversing the transactions and allocating
them to the correct stock unit, or by calculating the cash value of the transactions and
transferring the total amount to the correct stock unit.
10.26. In theory, there should be no net overall discrepancy to the branch, as any losses in one
stock unit will be compensated by the gains in the other stock unit. However, taken in isolation
this can appear as if an error has occurred in one of the stock units and can cause confusion,
obscuring other errors.
Outstanding transfers between stock units
10.27. Where a branch has more than one stock unit in use (see above) there may be times when
cash and/or stock is transferred from one unit to another. For example if stock unit A is
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running short of cash, stock unit B may transfer money to allow customer service to continue
smoothly.
10.28. The user in stock unit B should choose the transfer out option in Horizon and choose the
correct stock unit (in this case stock unit A) and transfer the cash out. A receipt is printed
which is kept in stock unit B to confirm this.
10.29. The user in stock unit A then needs to accept the cash in Horizon and print their own receipt
to confirm this. A report called “Transfer Reconciliation” can be printed from Horizon to
confirm that there are no outstanding transfers pending and that all totals sum to zero.
10.30. Failure to do this can cause cash or stock to be missed from cash and stock counts.
Product specific errors
10.31. Failure to follow the correct process for accounting for certain products can also cause
errors. A good example is the accounting process for Motor Vehicle Licence (MVL) discs
(commonly referred to as tax discs).
10.32. Branches will receive MVL discs from Post Office, which they have to “Rem” into their stock
using Horizon. When the discs have passed the time where they can be put onto a vehicle, the
branch is responsible for destroying the discs and following a process to inform Post Office that
they have been destroyed.
10.33. When destroying the discs, if the branch does not follow all of the steps of “spoiling the disc”
and remitting it to Post Office, Horizon will still record the disc as being in the branch even
though it has been destroyed.
10.34. When the branch carries out the end of the trading period rollover process and a full count
of the discs is undertaken as part of the stock balance, the number of discs in branch will not
match the amount recorded by Horizon.
10.35. Whilst this does not create a cash shortage, branches are held liable for missing discs at a
charge of £41.50 per disc, because Post Office is accountable to the DVLA for the missing discs.
10.36. Failure to follow the correct reversal procedure for a MVL disc may also lead to a branch
discrepancy. For example, a customer asks to buy a car tax disc and the transaction is
completed in Horizon, but if no payment is actually taken, the branch has to reverse the
transaction and the disc. If they only reverse the disc out of the system then the stock of discs
will balance, but the branch cash will not balance.
Theft
10.37. Theft by branch staff can and has occurred involving staff taking cash or stock directly from
safes or drawers or colluding with a customer to generate a gain for the customer and an
offsetting loss for the branch (this being ultimately borne by the Subpostmaster).
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10.38. These shortages would be identified when a physical cash count and declaration is made,
but it is not possible for Post Office to identify when the actual theft occurred. Unless the
person is caught in the act of taking the cash, it is probable that the loss would only be
discovered at the end of day cash declaration or at the time of completing the Branch Trading
Statement.
10.39. The branch staff may then be unaware of how the loss had occurred. Some thefts may also
be accompanied by an effort to disguise the theft (i.e. creating false transactions or gains).
Whilst it may be possible to identify the User ID that was used to process these transactions it
may be difficult or impossible to prove exactly when the theft occurred.
Example:
Cash or stock may be falsely declared to give the impression that the cash or stock is in the
branch when in fact it has been stolen.
“Phantom” cash remittance pouches could be created to mask an amount of cash that is
missing but the pouch is reversed before the dispatch. For example, Horizon does not take
into account the amount of cash in pouches when it calculates the amount of cash that it is
expecting to be declared. So, if cash is missing before the cash declaration is made, the
branch could make up a cash remittance pouch to cover the discrepancy, so in effect the
branch will not show a discrepancy in Horizon. Once the cash is declared, the branch will
reverse the remittance pouch from the system.
Hardware failure
10.40. In cases of hardware failure requiring the replacement of branch equipment there is a
possibility that not all data will have been successfully replicated before the failure of the old
hardware with a consequent possible loss of data. There are however checks and procedures
available, that if properly followed, should allow such transactions to be identified.
Conclusion
10.41. We have described a number of the operational functions and facilities used by
Subpostmasters, supported by examples of transactions and their processing by Horizon. We
have also highlighted some areas where the potential for confusion and error may occur.
10.42. Many of these issues are described in more detail in Part Two of this report where various
issues are more fully explored
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Appendix 1
Abbreviation Terms Meaning
found i . \f
ABS Anti Bandit Screen The glass fronted screen found in many branches. It is not bullet proof but usesI
safety glass and is intended as a deterrent for criminal activity.
ACC Authorised Collector's Card \Credit-card sized identification card that is presented by the Cash in Transit
Driver who collects/delivers cash and stock either to or from a branch
This is the dedicated broadband line that the Horizon system uses to send and
Asynchronous Digital
ADSL receive data to our servers which links the Horizon system to our data and
Subscriber Line
client systems
Transaction available in selected branches where specialist equipment records
Application Enrolment —_Ipersonal information such as fingerprints, photos and signatures for certain
Identification purposes, such as extension/application of immigration visas and DVLA driving
licence renewals
AEI
The blue airmail sticker that needs to be stuck to all airmail mails items posted
Ai I Label:
irmail Labels in branch
A priority overseas mail service which provides an electronic confirmation on
Airsure
delivery and provides extra compensation cover for contents
AmEx" or "Amex, is a diversified global financial services company. They
Amex American Express provide our traveller's cheques and cards are also accepted as a payment
Imethod for certain transactions:
We have a number of processes in place to prevent our branches from being
AML Anti Money Launderin
v 8 used to launder money which has been gained through illegitimate means
This is @ Post Office Team who make initial and ongoing engagement with our
ANC Agency Network Change Agency Network branches for all relocations, refurbishments and equipment
moves.
Annual Policy A 12 Month Travel Insurance Policy
[An APS transaction is one where a customer presents a bill which has @
barcode that can be scanned or a card that can be swiped, where the
APS Automated Payment Service ‘s r in be swiped, .
information is sent directly from the Horizon system to the client's data
systems
led with
ane Alarm Receiving Centre _{C2Nt"€ managed by Romec F&S and monitoring branches installed with Post
Office Ltd alarms.
ARQ Audit RetrievalQuery __IA request for Horizon archived information.
Manager of a set of Post Office branches that focus solely on their sales
ASM Area Sales Manager
performance and initiatives
IA computerized machine that dispenses cash to Banking customers, often
ATM ‘Automated Teller Machine puter isp B customers,
referred to as 'Cashpoint' or ‘Hole in the Wall’
A location within a branch where the balancing takes place, Also an area on
Back Office
the Horizon Online System where accounting processes are handled.
A paper report processed from Horizon computer system that shows a
summary of transactions done in a set timeframe for a particular stock unit
along with a summary of declared remaining cash, value stock (stamps, Postal
lorders etc) This is then signed by the Agent as being correct and on hand.
Balance Report
IA paper report processed from Horizon computer system that shows a
summary of transactions done in a set timeframe for a particular stock unit
along with a summary of system derived remaining cash, value stock (stamps,
Balance Snapshot Postal orders etc) based on sales and transactions completed at that time.
Although this shows accurate transaction volumes and values, this will show
what the system believes should be on hand for cash and value stock, based
lon sales put through the Horizon system
[An electronic hand held device that is used to scan barcodes for processing
transactions
Barcode Reader
BAU Business as Usual Normal way of working.
BoM's Business Development _I Previous term for a Post Office manger who managed a group of Post Office
Managers branches/areas. Part of Network & Sales Directorate.
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[A postal service which allows customers to post items to Forces personnel
BEPO British Forces Post Offices ‘
laround the world, sometimes free of charge
British Forces Post Office Numbers are for a given Forces base/ location where
BFPO Numb
umber they are identified by a number rather than an address for security reasons
[An Ad size printer, used for printing off selected reports, i.e. Branch Trading
Statement.
BoP Back Office Printer
A period of time between a branch declared balance. Normally completed on aI
BP Balance Period Wednesday and covers the last seven days but can be a smaller or larger
timeframe. Can have multiple Balance period within a Trading Period
[An individual code which identifies a Post Office branch. Formerly known as a
Branch Cod
ranch Code FAD Code (Financial Accounts Division)
A weekly publication which is sent to branches. This shows updates to
Branch Focus y .
transactions and products/processes as a reference material.
The expected criteria that a branch should meet. Could be transactional or
Branch Standards m
compliance based.
[An Ad paper report which is signed as a declaration of the month's trading
loutcome. This summarises transactions performed and lists the cash and Stock
BTS Branch Trading Statement
@ lon hand at the end of a Post Office Trading Period, This remains in branch for
reference and inspection as appropriate.
om ranch Manager JA crown branch term that relates to the person with responsibility for the
branch.
JA Post Office branded card that can be pre loaded with cash to pay towards
Budget Card Post Office products, mainly bill payments. Often used by people with low
income who use this as a way of maintaining household budgets.
Branch Code IA seven digit numerical code that identifies each branch in the network.
Bulk Cash [Cash in branch which is secured in the safe until required
Bulk Stamps Postage Stamps which are secured in the safe until required
Post Office stock (Car tax discs, Postal Orders, other items of value) which is
Bulk Stock
secured in the safe until required
Bureau De Change A counter where you can exchange foreign money
CAIRT [Contact and Issue Resolution Team
[An individual who looks after a number of branches and deals with
interviewing potential new Operators, enforcing contractual
cA Contracts Advisor BP Ps i
standards/procedures in a branch and having ownership of
suspending/terminating a branch's contract to operate a Post Office
The CAA enforces internat tions which govern the transport of
CAA Gl Aviation Authority fe CAA enforces international regulations which govern the transport of
dangerous goods by road, sea and air.
Direct manager of a set of Crown Post Office branches that focus solely on
cAM Crown Area Manager e Y
their sales performance and initiatives
The process of making a formal and complete statement of the physical Cash
Cash Dec Cash Declaration holdings within the till using the Horizon terminal. This is done every night and
allows for cash usage to be monitored
[The process of ensuring Post Office Branches have the correct levels of cash to
Cash Management
carry out business procedures
Cash on Hand [Cash that is physically held in individual stock units
cc Cash centre A centre that manages and distributes value items for the Post Office network;
This is the team responsible for responding to or seeking further information
ccu Customer Care Unit
to resolve customer complaints or enquiries.
cFU Cash Finding Unit Generic term for a range of units used at all screenless working positions.
Cheques A written order directing a bank to pay money for a product/service
[Term used for the P&BA team based in Chesterfield. Now known as the
Chesterfield
Finance Service Centre
Cash in transit or Cash & Value [Post Office Ltd business involving delivery and pick-up of cash to/from
CIT or CVIT
in transit branches and other businesses.
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IA customs label the customer completes which details the contents of a
ene Customs Declaration Label I a1, this is affixed onto overseas mail for goods up to the value of £270.00
JA customs label the customer completes which details the contents ofa
cn23 Customs Declaration Label Iparcel. This is affixed onto overseas mail, the contents of which are valued in
lexcess of £270.00
These are agreed between Agents and Operators with Post Office Ltd prior to
con Conditions of Appointment. {2®P2intment and form part ofthe Contract for Services or Agreement signed
Examples of CoAs include - The official opening hours. Details of new signage
required. Etc.
JA container where the coins that are immediately available for pay outs are
Coin Hopper
held
, A selection of Coins produced from the Royal Mint for commemorative
Coin Sets >
Joccasion which are available to buy from selected branches
combi JA counter in a branch that enables customers to be served both retail productsI
& post office transactions at the same time.
Comms Communications
Compensation [A form of remuneration for loss or damaged goods
Where different settlement rules apply for one or more items ina session (eg.
Complex Basket lone item can be settled with a debit card but another item can only be settled
by cash),
A set of rules and regulatory controls that affect the way we sell products and
Compliance :
services in our branches
Where more than one mail items are sent and addressed to the same
Consignment destination. They are charged on a total weight basis, rather than on individual
pricing
A customer receipt that proves that a mail item has been accepted over the
cop certificate of Posting _I?95* Office counter. Can be hand written or computer generated. This does
not guarantee delivery, merely proof that the clerk has accepted the item at a
place and date.
A printer that supplies customer receipts for goods and services using a printer
Counter Printer
roll, rather than A4 paper.
CPT Cash Packet Transfer
cpu Central Processing Unit IThe CPU is the brains of the computer where most calculations take place
Credence Post Office Management Information Reporting System.
Credit Card JA plastic card issued by a banks for the purchase of goods or services on credit
[A sales technique used to inform customers of related transactions, le Ifa
Cross Sell customer asks for foreign currency, we would introduce Travel Insurance as
product
Part of the Network of cirea 300 branches that Post Office Ltd own and have
Crown Office
direct employees running the branch.
JA branch that is run by an independent operator, generally only open for
cso Community Sub Office Y ps Ps Benerally only oP.
restricted hours.
The validation that changes to direct & indirect customer material and/or
Customer Experience .
communication to not cause a negative impact.
A locally accepted times for last acceptance of mails and doing daily
Cut Off Times paperwork to allow for summaries to be produced. Items taken after this pointI
Iwould be sent/processed the following working day
D1 Driving Licence Application Form
IA metal stamp that gives an impression on a receipt/bill which provides
Date Stam
P verification of a transaction showing the date and location of acceptance
[An Act of the UK Parliament which has now been repealed and replaced by the
DDA Disability Discrimination Act ms pI v
Equality Act 2010
Debit Card A plastic card issued by a banks for the purchase of goods or services.
[A postage stamp that is part of a regular issue of a country's stamps. These
Definitive Stamps generally depict the Queen's Head or the individual country emblem and may
lor may not show a value.
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D6 Dangerous Goods Items of mail that are considered a hazard/risk when in transit
DPA Data Protection Act [A United Kingdom Act of Parliament which defines UK law on the processing of
data on identifiable living people
DVLA Driver oe Licensing I <5 vernment body that deals with driving licences and motor vehicle licences.
ency
Department of Work &
we parement of won Government body that deals with benefits payments
Pensions
cA Equality Act An Act ofthe UK Parliament that gives clear guidance on discrimination and
how to treat all individuals fairly
chic European Health Insurance [A plastic card issued by the NHS which allows for free health care at certain
Card European counties.
End of Day procedure collating the day's transactions and despatching necessary paperwork
ETOL Electronic Time Overlock
[A card swiped through the Horizon system that credits a mobile phone with
E-Top Up Card
opp can airtime
E-Voucher A receipt generated from Horizon to credit a mobile phone with airtime
FAA Financial Assurance Audit
Fast Drop is a new service available with Royal Mail Online Postage that helps
customers time at the Post Office®.
Fast Drop The service is free and is available with a range of postal services, which can be
dropped off in selected branches
FCA Financial Conduct Authority IA body that regulates firms that undertake financial services activity in the UK.
A field based Post Office employee who assists post office agents with the
FCA Field Change Ad
eld Change ACVISOF I process of transforming or relocating their branch.
loften bought by Philatelists (stamp collectors) An envelope that customers can]
FDE First Day Envelopes _I buy to affix special issue stamps on and get hand stamped on the first day of
the stamp issue.
The process of going through and declaring all cash plus stock in hand, as per
Balance Report, and committing to the figures. This will then produce a ‘Final’
Final Balance
balance report which the Operator should sign as a true reflection of the items
in branch
Foreign overnight cash
FONCH reig eI Amount of foreign currency declared as being held in branch overnight
declaration
Foreign Currency Currency from another country
Fortress [A secure counter serving position within a post office
A post office with franchise contract. Usually operated from ex Crown
FPO Franchise Post Office Branches where the operator is a ‘High Street’ chain. le. WH Smiths. These are
run using their own staff.
FS Fujitsu Services The company who develops and maintains the Horizon equipment
Regulator of all providers of financial services in the UK. The FSA has now
FSA Financial Services Authority Ibecome two separate regulatory authorities, the Financial Conduct Authority
land the Prudential Regulation Authority
A field based Post Office employee who delivers new entrant training,
FSA Field Support Advisor
conducts audits and intervention activity within the post office network.
7 . Formerly P&BA and based in Chesterfield. They collect and monitor data from
FSC Finance Service Centre . a 7 7
transactions and liaise with our external clients if discrepancies are found
[A post office employee who works in a Crown Post Office, They discuss and
FSS Financial Services Specialist introduce Post Office financial products to customers but cannot give advice,
merely factual information
FTL Field Team Leader Manages the activity conducted by FSAs
FIT Flip Top Till [Used in branches that have open pian or combi counters
FUB Follow up Balance
Gains A discrepancy showing a higher value between physically counted assets and
the expected assets based on sales on Horizon such as cash/stock etc.
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Gateway
A network point that acts as an entrance to other computers on the same
internal network.
Giro Slip
The Giro Slip is pre-printed Giro stationery inserted into the slip printer to
produce a summary of Giro transactions taken on that day which need to be
manually dispatched to the processing centre (Summary of transactional
receipts or payments taken on behalf of Santander which was formerly
Alliance & Leicester and prior to that Girobank)
Global Economy
IA Parcelforce Worldwide service which provides a basic service for sending
mail with no guaranteed delivery times to over 200 countries
Global Express
IA Parcelforce Worldwide service which provides a Guaranteed delivery
timeframe _by Airmail
Global Priority
A Parcelforce Worldwide service which provides a Guaranteed delivery by
Airmail for Parcelforce Worldwide account holders
Global Value A Parcelforce Worldwide airmail delivery service
Grapevine is a FREE service provided by Post Office Security to those working
Grapevine Iwithin Post Office branches, to keep them updated on criminal activity in their
area
hvac Her Majesty's Revenue & — [Government body that checks that Post Office Limited complies with anti
Customs money laundering regulations.
[Name for the system software which is permanently connected to our servers
HOL Horizon Online i is Y
online
Horizon Name of the system (equipment, software and processes) used at the post
office counters.
HOL (Horizon) Help
Horizon Online Help
An integral facility within the Horizon system which allows individuals to find
land also print post office instructions on products and services, which can be
laccessed whilst serving a customer.
Horizon Service Helpdesk or
This is the contact centre for branches who need technical help with their
Horizon equipment- For example if a replacement screen is needed or an
HSH or HSD Visit needed to fix a technical issue. It's accessed by calling!
Horizon Service Desk +
ind choosing the option for technical enquiries relating to V
Horizon system including hardware.
ico Information Commissioner's [independent public body set up to promote access to official information and
Office protect personal information.
IPS Identity & Passport Service
inis Interactive Recruitment —_ IThe database we use for advertising and also applying for any Royal Mail
Information System I Group job vacancies. This can be accessed from internal and external websites.
A tax free savings account where a certain amount can be invested within each
ISA Individual Savings Account e
tax year,
[An optional extra product offered by Royal Mail which allows for a signature
ISF International Signed For _ jon delivery for mails overseas which can also provide compensation if
lost/damaged
The term is commonly used as a synonym for computers and computer
iT Information Technology _Inetworks, but it also includes other information distribution technologies such
as television and telephones
Keyboard ‘The hardware attached to the laptop or as a peripheral item on a PC that
y allows for inputs to be made using number or letter keys plus command keys
Losses A discrepancy showing a lower value between physically counted assets and
the expected assets based on sales on Horizon such as cash/stock ete.
Magnetic Cards fA plastic card with a magnetic strip along the back, which is used as a way of
paying bills or saving at the post office
Mail Segregation
The standards for how customer's mail is kept and separated within the post.
office secure area allowing compliance with Royal Mail expectations
Mails Despatch
[The time at which the post person collects the mail from a post office branch
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[A post office branch which operates under a Mains operating model. These get]
Main PO Main Post Office
remunerated for the number of transactions they do.
Data received from various streams within the business which allows for
MI Management Information performance and transactional Information to be collated and used for
management decisions
MoneyGram/receive
MoneyGram is a service available in branch which enables customers to
receive funds from another individual within the UK and overseas
MoneyGram is a service available in branch which enables customers to send
MoneyGram/send
Gram funds to another individual within the UK and overseas
Monitor The screen of the Horizon equipment
MoP Method of Payment _I The way in which payment is received for a product or service
or Mall Order Returns [AWAY for customers to return goods they have bought online from Home
Shopping retailers. le. Next. Postage is usually free at branch.
seo Modified Sub Post office Ie for an ex-Crown Office that is now run by an individual using their own
staff but offering the original services available when it was a Crown Office.
Mvt Motor Vehicle Licence _IA term used for a vehicle or car tax dise
Mystery shopping is a tool used externally by companies to measure quality oF
Mystery Shopper service, or compliance with regulation, or to gather specific information about
products and services
The first port of call for post office branches if they have a query or need help
It is a Helpline for Branch Staff for all Robbery, Burglary or major incidents plus
Network Business Support P "Y, Burglary or maj
NBSC cone all transaction, navigation queries (e.g. which icons do I need to select for a
particular product or service) or stock related queries. It's accessed by ringing
Th ical f I . f
NCA Network Change Advisor » IAlsstsin the physical needs of moving/relocating branches. Liaises with alarm
land safe companies to ensure work is done to standard and timescale
Network This relates to the Post Office network of approx. 11500 branches.
The National Federation of Subpostmasters (NFSP) supports subpostmasters
Nesp National Federation of Sub and operators across the UK. They are an independent membership
Postmasters organisation with a commercial trading company to help support the retail
businesses of their members.
Post Office client. We sell Premium Bonds on their behalf. Used to be called
Ns&i National Savings & Investment I" °° a
National Savings
The actual process of branch changes within the Network. Branches are being
NT Network Transformation _Iremodelled internally, others may be relocating. Funding has been received
from the Government to support this.
wre Network Transformation {This is a term used for the current programme of activity regarding branch
Programme changes within the Network using Government funding to support this.
These are postage stamps where the value is not shown. It may just say 1st
NVI Non Value Indicator _IClass or 2nd Class on the stamp. These stamps can be used at any point in the
future regardless of actual price increases.
osc Operational Business Change
OFCOM Office of Communications Regulatory body that outlines the standards we must meet when we promote
land sell our Telecoms and Broadband
oie Officer in Charge
ji j h hol r I
oncn Overnight Cash Holdings [Derived from declaring actual cash holdings in branch on a daly basis at close
lof business
One for All Gift cards
A gift card pre-loaded with an amount of cash that can be used in high street
stores or online as a method of payment
Onsite Training
Where an FSA provides training to an operator at their branch
OOH Out of Hours IA stock unit that is used out side the Post Offices core hours
Counter positions with no glass screen. Secure safes are fitted below the
Open Plan
counter.
P&BA Product & Branch Accounting IAlso know as ‘Chesterfield’ and now called the Finance Service Centre
Database holding postcode and address details. Used for validating,
PAF Postal Address Finder ep 8
transactions or personal records
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Parcel Hatch
[A way of securely transferring a parcel from the public side of the counter to
the secure area
Partner Banks
These are High Street banks that allow us to do a range of services on behalf ofI
them to enable customers access to their accounts, usually with no charge.
Password
A word known only to an individual which allows access to private/confidentiall
systems or documents
PAWS
Packaging, Address, Weight,
Size
These are the basic criteria on which mails items are sent regarding standards
of acceptance. Is it correctly wrapped, is there an acceptable address, does it
comply with weight and size restrictions?
Paystation
A standalone bill payment terminal similar to our competitors (Paypoint,
Payzone), usually situated on the retail side of the branch, that allows
customers to top-up gas cards/electric keys and also pay bills if the Post Office
counter is unavailable
PFWW
Parcel Force World Wide
Name of the Express parcels arm of Royal Mail Group. They deliver to inland
land international destinations and specialise in guaranteed delivery options.
PHU
Portable Hardware Unit
[Commonly used for locations with very small customer numbers & where
Horizon equipment is taken to various locations to provide a service.
PID
Personal Invitation Document
[Old terminology referring to the letter sent to an individual stating that they
could fetch their Post Office Card Account card from their local branch - Now
referred to as PUN (Pick-Up Notice)
PIN
Personal Invitation Number
Personally known number which allows the user access to
processes/transactions. le. Cash withdrawal using a Chip & PIN card
Pin Pad
The devise, usually on the public counter that allows for entry of the PIN by
the customer
PIP
Pricing in Proportion
[The method used by Royal Mail to charge on size and weight basis rather than
weight alone.
PIP Template
Plastic template used in branches to measure the size of letters and small
parcels to determine which price structure to use
PLU
Product Look Up
Rarely used ‘shortcut’ key on the Horizon keyboard. Every transaction has an
allocated product number which, if known, can be typed into the Horizon
system. In practice this is not used as we have icons displaying the actual
transaction which are easily accessible.
POCA,
Post Office Card Account
A basic account that allows for the Department of Work and Pensions to pay
an individuals benefits. Nobody else can pay in and the account holder can
lonly take cash out. No interest received on the account
POCA emergency
This is a payment, subject to a maximum value as authorised, that may be
made to a Post Office Card Account customer during an emergency situation
and must be authorised in advance of the transaction. The branch would ring
ayment
Pay nd choose the option for authorising emergency POCA
This is the contact centre for customers to call if they have an enquiry about
Post Office External Contact
POEx contre Post Office Products or Services and availability, to make a complaint or to
pass on thanks and recognition. The number if
The range of savings and insurance products we have which are sold in branch,
POFS Post Office Financial Services Ionline or by post. Products are done in conjunction with Bank of Ireland as a
general rule.
Joint venture between Post Office Ltd and Bank of Ireland which manages
Post Office Financial TravelI
POFTS seen financial products offering travel money, travellers cheques and the Travel
Money Card
Part of Royal Mail Group wholly owned by the Government. Responsible for
POL Post Office Limited abies een ote benches, °
maintaining the number of Post Office branches in the UK
A post office branch with a Local operating model contract. These are
PO Local post Office Local generally smaller branches with a large retail side which have the Horizon
system next to their retail till. They offer a slightly smaller product range for
lease of transactions.
POS Point of Sale Leaflets and posters in branch identifying our products and services
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A self adhesive label that is produced by Horizon showing the value of the
Postage Labels postage required on a mails item. These have replaced stamps as a general
rule as they allow for faster processing at the counter and with Royal Mail
A printed document similar to a cheque but processed and owned by Post
loffice Ltd. Can be made for any value up to £250 and is a guaranteed funds
document. Payable into a bank account or potential to be encashed in a Post
Office branch
Postal Order
IA service/pricing structure for sending mail abroad. Criteria means only certainI
Printed Papers i °
items can be sent this way. le. Books, magazines.
Performance Standards
PSA Ad t used during training t rt a clear I th.
‘Assessment jocument used during training to support a clear learning pa
PSTN Public Switched Telephone
Network
pse Premium Saving Bonds I” investment opportunity from National Savings & Investment Product which
we sell on behalf of
PSU Power Supply Unit
PUN Pick-up Notice A document that a customer needs to be in receipt of, enabling them to
collect their Post Office Card Account card from a_branch
[An Electronic Board displaying daily foreign currency rates, usually in larger
Rates Board
‘ates Boar branches and visible from the outside of the building
A consignment to or from a Branch of Cash, Stock or other values to be
REM Remittance
brought to account
, Recording the movements of items into a Stock Unit/ Branch (Cash and value
Rem In Remittance In
stock)
Recording the movements of items out of a Stock Unit/ Branch (Cash and
Rem Out Remittance out
value stock)
This is how an Agent gets paid from Post Office Ltd. It is based on a product
Remuneration payment for each transaction they do and differs from one transaction to the
next
Restrictions Policy A list of transactions that is restricted within a Post Office branch
Reversal The act of taking out a transaction that has been done previously on the
Horizon system. Often used to correct errors.
Subsidiary of Royal mail Group - responsible for delivery and collection of mail
RM Royal Mail ry of Roy Po resp y
within the UK.
A plastic card from Royal Mail, issued to business customers after vetting
procedures are completed, which allows and authorises the purchase of large
RM Authority Card volumes of postage stamps where the business wishes to pay by cheque. The
card has the business details on and is used as a guarantee that the cheque
will be honoured (not bounce)
This is a Royal Mail contact centre for all personal and business customer
RMCS Royal Mail Customer Service enquiries. Personal Enquiries are made on” GRO__jand Business
Enquiries are made on! GRO
IThe managing company overseeing: Royal Mail, Post Office Ltd., Parcelforce,
RMG Royal Mail Group
land General Logistics Systems (GLS). UK's largest employer
RML Royal Mail Letters
RMSD Royal Mail Special Delivery [A Secure next day delivery offered by Royal mail giving priority handling and a
guaranteed delivery window of either by 9am or 1pm.
Royal Mail Engineering [Outsourced facilities management for RMG (id cards, clock setting, cleaning,
ROMEC
Construction alarm maintenance etc)
RSF Stamps Recorded Signed For Stamps I*st2™e that can be used to pay for a Royal Mail signed for’ service where the
item is a basic weight letter/large letter
[An individual who looks after a number of branches within a geographical area
RSM Regional Sales Manager _Iand gives sales support to those branches through coaching and delivering
workshops
RSP. Retail Service Point
[An individual whose responsibility is to the NT converted branches ensuring
SCM Sales Capability Manager compliant and correct sales conversations are in place. Generally for a short
time period of up to 2 months.
[One positioned branch. Could be open plan or fortress based (behind glass
sco Single Counter Office
screen)
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Secure Area
[An area within the post office where cash, stock and mails items are kept. No
access allowed to the general public
Settle centrally
Removes the amount from the Branch accounts into a holding account at
P&BA, Chesterfield.
SIDS
Self inking Date Stamp
[A metal date stamp that self inks in between stamping used for validating
transactions showing location and date
Single Trip Policy
[A Travel Insurance policy which covers one defined period of time as needed
by the customer
Small Parcel JA term used in conjunction with sending mail, up to a certain size.
Standard Operational
sop ‘andard Operationa
Procedure
SORN Statutory off Road Notification Informs the DVLA that the owner of a vehicle is taking it off the road
Traditional name for the individual who owns a branch. Other terminology =
SPMR ‘Sub postmaster ey
Agent or Operator
sPso Scale Payment Sub Office _IRefers to the type of branch and which contract they are on.
‘The process of making a formal and complete statement of the physical StamI
Stamp Dec ‘Stamp Declaration p bd p phy: P
holdings within the till, usually done when completing the balance.
Stamp Portfolio ‘Stamp Book A book that holds loose stamps
Stock on Hand list ofall stock the office is holding excluding cash (Postal Orders, stamps,
tax discs etc)
[A title given to an account which holds a particular amount of cash and stock.
su stock Unit Most branches use one stock unit and identifier, normally AA, but some larger
branches have multiple stock units and are allocated to individuals for greater
responsibility/security
SVM ‘Stamp Vending Machine
Swipe Card A magnetic card sometimes used for paying bills
Tac Terms & Conditions [A definition in words between the consumer and the product owner outlining
standards
ter Track & Trace Offered by Royal Mail or Parcelforce Worldwide for certain products which
allows online/call centre tracking and confirmation of delivery for mails items
, i [An electronic confirmation of certain transactions based on transaction data
Tas Transaction Acknowledgments "
from external clients which is sent to a branch for them to process.
An electronic accounting adjustment issued by Finance Services Centre
Tes Transaction Corrections __I Chesterfield which corrects previous errors in branch. This has an impact on
the branch balance and would cause a discrepancy for the value issued,
TDLC Time Delay Lock Compartment
A card that is available in branch or online in certain currencies which allows
for a prepaid value of currency to be loaded, Can be used as a Mastercard to
TMC Travel Money Card pay for products, primarily abroad, and also able to withdraw cash from ATM's
abroad. They have the security of a chip & pin and the convenience of a debit
card but are not actually linked to a bank account.
Top Up The process of adding credit to a pre-paid card, typically mobile phones
1 (TP) Trading Period (Branch TradingIA period of time where at the end a branch must do a monthly balance.
Period)
Usually 12 periods in a year, depending on the number of fiscal weeks.
Transaction Log
[A report which allows for Horizon to be interrogated and produce transaction
land events processed in the last 42 days
Transaction Reference
Number.
An individual reference number generated for each transaction
Travellers Cheques
A form of currency to be used when travelling
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Appendix 1
The process of going through and declaring all cash plus stock in hand, as per
Balance Report, and producing the report. A trial balance shows the user the
current state of the balance but as it is only in ‘trial’ format, it allows for the
activity to be cancelled without committing figures.
Trial Balance
United Kingdom Borders
Agency
UKBA,
Security elements which are only visible under a UV light, used mainly on bank
Ultra Violet Feature sng Ii
notes, driving licences and passports
[The process of selling more of the same item to the customer. le. If a customer}
Up Sell
pee asks for 10 stamps, the clerk should offer them a book of 12
[A logon access code which is identifiable to the individual based on a standard
User Name format. This is to enable usage of the Horizon system whilst still being
compliant and accountable
Allows employees to securely access their company's intranet while traveling
VPN Virtual Private Network
outside the office
VR Voluntary Redundancy —_ I Whereby staff voluntarily leave the business in exchange for agreed terms.
Watermark A faint design made in some paper during manufacture that is visible when
held against the light
was WH smith Post office branch services are now located in many high street WH Smith's.
They have roughly 70 branches across the country, mainly ex Crown Offices
This is a regular training session which many branches and Post Office Ltd
internal teams use to cascade information and receive feedback from team
members
Work Time listening and
learning
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Appendix 2
Post Office List of products
Service Availability Description of service
Government Services
Post Office Card All branches A basic account for customers who are in receipt of
Account
state pensions, benefits & tax credits and who do not
have a UK bank or building society account.
Payments are made into the account by the paying
department and customers can withdraw cash at all
Post Office branches or the Post Office cash machine
network.
Local council services
Local Area based
Services on behalf of over 300 local councils covering
a wide range of applications and payment services
both from and to residents and customers. Services
include cash collection from residents for rents, rates,
council tax, parking fines and licence fees, payment
services including asylum seekers allowances, and
rebates, form checking including benefits, planning
and concessionary travel applications and identity
checking and verification services.
Car Tax — Motor Vehicle
Licence Issue
4,600 branches
Car Tax - Motor Vehicle Licence and Statutory Off
Road Notification (SORN) services provided.
Customers can have their documents checked and
get their licence at issuing Post Office branches
nationwide.
Driving Licence photo
card renewal
750 branches
Allows photo cards to be renewed and makes sure
the photo card renewal application meets DVLA
requirements by taking a photo to the required DVLA
standards, ensuring that the application is error free,
capturing an electronic signature and sending the
application electronically and securely to the DVLA.
International driving
permit
Selected branches
Applications can be made in selected branches for an
International Driving Permit which is required to drive
legally in many places overseas alongside a UK
driving licence.
Passport Check & Send
2,500 branches
Customers can take their passport applications to a
Post Office where the application form and
documentation are checked to ensure that everything
is correct. The application is then despatched by
Royal Mail Special Delivery priority processing.
Identity checking
services
Selected branches
Customers who need to have photocopies of identity
documents certified (for example when applying for a
mortgage, bank account or new job), can have
original documents checked and photocopies certified
at the Post Office.
Biometric Residence
Selected branches
Customers who need to apply to stay in the UK who
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Permit Application for are from outside the European Economic Area (EEA)
the Home Office may need to apply for a Biometric Residence Permit
and can do so at selected Post Office branches if they
receive an invitation letter from the Home Office. The
Post Office captures the customer's biometric details
by taking their photograph, fingerprints and digital
signature and sends the information securely to the
Home Office.
CQC — CRB registration I Selected branches The Care Quality Commission (CQC) is the
service independent regulator of all health and social care
services in England. Customers who need a Criminal
Records Bureau (CRB) check from the CQC can get
their application checked at the Post Office to verify
their identity.
Rod fishing and game All branches based A range of rod licences available for angling in
licences on demand England and Wales and game licences to hunt game
are stocked in branches where there is local demand.
Fishing licences are available in England and Wales
only. Game licences are available in Scotland and
Northern Ireland only.
Financial services
Personal banking All branches Free over-the-counter cash withdrawals, cashing of
personal cheques, cash deposits or cheque deposits
(the latter in most cases) for partner banks, e.g. Bank
of Ireland, Bank of Scotland, Barclays, cahoot,
Clydesdale Bank, First Direct, First Trust, Halifax,
HSBC, Lloyds TSB, Nationwide, NatWest, Northern
Bank, Santander, Smile, The Co-operative Bank,
Royal Bank of Scotland, Ulster & Yorkshire Bank.
Business banking All branches Business banking services available in branch on
behalf of Santander, Co-operative, Bank of Ireland,
Barclays and Clydesdale.
Cash machines Over 2,000 locations I Over 2,000 free-to-use cash machines are available
nationwide at Post Office branches nationwide.
Bureau de Change All branches A wide range of commission free currencies and
American Express travellers cheques, 1.600branches
offer a range of currencies on demand. An additional
2,500 branches offer Euro and Dollars on demand, a
further 3,436 offer Euros on demand as well as
Turkish Lira in the Summer. An additional 4,500
branches offer Euros on demand either in branch or
online. Currencies can be pre-ordered for collection at
any branch.
Travel insurance All branches All branches and available on demand in 9,000
branches and via phone.
Travel Money Card Selected branches The Post Office Travel Money Card is available in
three currencies — Euro, US Dollar and Sterling — it is
a pre-paid card that customers can load with
currency. It can be topped up at selected branches or
over the phone.
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Moneygram All branches International money transfer of up to £6,000 to over
150 countries.
Automated bill All branches Acceptance of payment and pre-payment towards a
payments variety of bills including gas, electricity, water, phone,
council rent, mail order and insurance. (Some
schemes available on an area basis as agreed with
local authorities.)
PayStation and All branches To charge electric keys, Quantum Gas Cards, E-pay
charging of electricity Transactions. (Stocks of electricity tokens for meters
smart cards are also available in selected branches based on local
schemes.)
Mortgages Selected branches & I A range of mortgages are available including fixed
online rate mortgages and tracker mortgages.
ISA All branches The Post Office offers a fixed rate and variable rate
ISA: applications by phone, post or at the Post Office.
Ajunior ISA is also available which is a stocks and
shares Junior ISA: applications on-line or by phone.
Growth Bonds All branches Fixed term bond product offering 1, 2 & 3 yr terms.
Apply by post, phone or at the Post Office.
Reward Saver All branches Variable interest rate product with a bonus for the first
12 months. Apply by post, phone or at the Post Office.
Instant Saver All branches Easy access variable rate product with a bonus for
the first 12 months. Available across over60,000 LINK
cash machines. Apply by phone, post or at the Post
Office.
NS&l Premium Bonds All branches Premium Bonds are an investment where, instead of
interest payments, investors have the chance to win
tax-free prizes. When someone invests in Premium
Bonds they are allocated a series of numbers, one for
each £1 invested. Minimum purchase is £100.
Customers can hold up to £30k. Apply by phone, at a
Post Office branch or online.
Mail Services
UK Parcels Guaranteed I All branches Guaranteed UK Parcel services for next day
deliveries:
- Royal Mail Special Delivery Guaranteed by 9am®
- Royal Mail Special Delivery Guaranteed by 1pm®
- Parcelforce Worldwide express24
- Parcelforce Worldwide express9, (available in
selected branches), express10 and express AM
UK Parcels Confirmed All branches Confirmed UK parcel services:
- Royal Mail Signed For® 1st Class
- Royal Mail Signed For® 2nd Class
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- Parcelforce Worldwide express48
UK Parcels Standard All branches Standard UK parcel services are reliable and easy to
use and offer a range of delivery options for non-
valuable items:
- Royal Mail 1st Class
- Royal Mail 2nd Class
- Parcelforce Worldwide express48
International Parcels Selected branches Guaranteed international parcel services for
Guaranteed international parcel delivery,
with the added security of end-to-end tracking and
online confirmation of delivery:
- Parcelforce Worldwide globalexpress
- Parcelforce Worldwide globalpriority
International Parcels All branches Confirmed international parcel services with tracking
Confirmed or signature on delivery:
- Royal Mail Airsure®
- Royal Mail International Signed For®
International Parcels All branches Standard International parcel services:
Standard = Royal Mail Airmail
- Royal Mail Surface Mail
- Parcelforce Worldwide globalvalue(available in
selected branches)
- Parcelforce Worldwide globaleconomy(available in
selected branches)
Drop & Go All branches Drop & Go —a free, fast-track service, aimed at Small
Businesses, internet sellers and customers sending
regular amounts of mail. Uses a prepaid card, and
helps speed up the branch journey for these
customers.
Additional postage All branches Articles for the blind, HM Forces letters (British Forces
services Post Office) etc.
Philatelic Selected branches Royal Mail special issue stamps and associated
products, such as presentation packs and first day
covers (stocked based on demand).
Local Collect 9,771 branches Undelivered postal items are taken to the nearest
participating Post Office by the postal delivery staff for
later collection or customer has opted for the
collection at their local Post Office branch.
Redirection All branches Mail redirection service for customers who are moving
home.
Telephony
Home Phone All branches The Post Office phone service offers customers line
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rental and calls. Application process at Post Office
branches, online or by telephone.
Broadband Essential All branches Capped usage broadband service available
with Home Phone nationwide, minimum 12-month contract. Application
process at Post Office branches, online or by
telephone.
Broadband Premium All branches Unlimited usage broadband service, wireless router,
with Home Phone available coverage. Application process at Post Office
branches, online or by phone.
Phone cards All branches UK International calling card offering calls to national
and international destinations.
Mobile E top-ups All branches Top-up service for all pre-pay mobile providers
through Horizon and PayStation.
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