05/2010
Agency Changes Communiqué (ACC)
To: Contract Advisors CC: Rod Ismay
Network Support Admin Teams Keith Woollard
Heads of Business Development Doug Brown
Senior Account Managers Keith Rann
BDMs John M Scott
Agency Network Change Team Marianne Burgess
Distribution list
From: Gayle Peacock Date: Friday 5° March
2010
Network Efficiency Programme Manager
Subject: Branch Standards and Financial Consequences
Introduction and Purpose
The Branch Standards booklet and supporting contract amendment will be
received by all agency branches week commencing 8" March 2010. The
documents will outline the standards required to run a branch compliantly,
securely and efficiently and also the financial and non-financial consequences for
not meeting the standards. The purpose of this ACC is to:
e explain the reasons for the launch of Branch Standards to the agency
network,
e explain the rationale behind the inclusion of particular standards,
e outline the consequences for subpostmasters, franchisees and company
operators for not meeting the required Branch Standards,
e identify the ownership of Branch Standards and the mechanism for any
future changes to the areas which are included or the consequences that
apply.
This ACC should be used in conjunction with the current corrective action ACCs.
Background
The Network Efficiency Programme was established as one of the
Forward:3toeleven Programmes in 2008. The purpose of the Programme was to
improve conformance and compliance across a range of areas, with the aim of
reducing costs associated with non-conformance and non-compliance, reducing
Regulatory risk, protecting our brand and more importantly protecting our
customers.
Last Communiqué: 03/2010 Future of Branch Pre-resignation Advice
04/2010 Vacancy Report Changes from 1* March 2010
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The Programme team worked with a number of key business stakeholders to
understand how the aims identified above could be achieved. It was agreed that
the branch network needed to be made aware of the business standards
regarding conformance and compliance and the implications on our customers,
Post Office Ltd and themselves if the standards aren’t met. The group also agreed
that a management information system to highlight performance, a consistent
method of managing performance and the possibility of financial consequences
for not meeting some of the standards were key deliverables to achieving
improved conformance and compliance.
Scope
Whilst Branch Standards are relevant to all branches in the network, the initial
scope of this activity is to launch Branch Standards and the associated
consequences within the agency network, including those branches operated by
multiple partners. WHSmith operated branches are currently out of scope at this
point in time, due to the nature of the contract that is held with the company:
however, this is something that will be launched in this part of the network once
all of the contractual complexities have been resolved. It is anticipated that a
phased approach will also be applied within the Crown network.
Branch Standards will apply to Franchisees, but a separate ACC will be circulated
with the relevant documentation.
Approach
The first step for the Programme was to agree with key stakeholders which
standards of compliance and conformance would be within scope of the project. A
number of areas were identified and then prioritised into four main categories:
e Regulatory or client risk - i.e. failure to comply may result in financial
penalties to Post Office Ltd either from Regulatory bodies or clients, legal
action, product removal, brand damage and loss of income
e Significant financial cost to Post Office Ltd - i.e. potential extra interest
charges on holding excess cash
e Resource or financial_impact on Post Office Ltd - i.e. the amount of
resource required to manage non-conformance and non-compliance, such
as the issuing of Transaction Corrections and losses incurred by breaches in
security
e Brand damage - i.e. failure to follow guidelines may result in extra
customer complaints.
Once the areas had been agreed, the next step was to determine the
consequences for not following procedures. It was identified that the majority of
areas within Branch Standards could be managed within the existing corrective
action process for subpostmasters, franchisees and company operators.
However, it was decided that financial consequences should be introduced for
areas which have the biggest financial impact on or pose the greatest Regulatory
risk to Post Office Ltd and customers. The purpose was not to generate income
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but to encourage conformance and compliance. Following the approval to proceed
by the Executive Team, a number of proposals were worked through with Post
Office lawyers and an extemal Legal Team, Camerons McKenna. This was to
ensure that Post Office Ltd could demonstrate that the financial consequences
being passed to subpostmasters, franchisees and company operators were either
the equivalent to or less than the costs actually incurred. Once the proposals had
been approved by legal, the contractual amendments were drafted to facilitate
the implementation of the financial consequences.
The proposals for the financial consequences were signed off by the Risk and
Compliance Committee chaired by Alan Cook, and the Network Conformance
Executive Team sub-group chaired by Paula Vennells. The business case
requesting funding for the resource to manage Network Conformance activity was
agreed by the Post Office Investment Committee in July 2009.The
Communications Team worked with the lawyers to produce the supporting
communications and contractual change, which have been branded Branch
Standards. Discussions have been held with the National Federation of
Subpostmasters throughout the process. However, whilst they are supportive of
tackling worst offenders within the network, they are not supportive of
communicating Branch Standards to the whole agency network.
Process
All agency branches will receive the following Branch Standards booklet, which is
designed to act as a reminder of instructions that have been previously
communicated. This is not a replacement for existing operating procedures.
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The following covering letter and contract change will be sent to all individual
subpostmasters.
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Multiple partner operated branches will receive a copy of the Branch Standards
booklet along with a different covering letter attached below.
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Multiple partners will receive a copy of the Branch Standards booklet, a copy of
the contractual change and a different covering letter attached below.
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A scorecard has been produced for each branch and shows the performance
against each of the standards. This will show the performance to date and will be
received on a monthly basis.
Current corrective action processes will be followed where subpostmasters,
franchisees or company operators have failed to meet Branch Standards. The
following financial consequences will also apply:
e If branches fail to reach the required Overnight Cash Holding declaration
standards, including those for ATM, despite remote intervention and a visit
is required by the Network Support Field Team to re-train them, the
subpostmaster, franchisee or company operator will be charged for the cost
of the visit.
e The principle above will also apply to branches that fail to complete any
Regulatory Compliance training by the required date.
e There will be a £41.50 charge per missing Motor Vehicle Licence discs.
e Remuneration will not be paid for non-compliant bureau de change
transactions. This change was introduced in May 2009 and has now been
included within the Network Conformance Activity.
With the exception of with-holding remuneration for non-compliant bureau de
change transactions, the practice of which is already established, financial
consequences will apply from the 1* June 2010.
The process for managing performance against Branch Standards will be co-
ordinated and managed by the Network Conformance Team that works to the
Network Performance Manager within Network Support. The team will be
responsible for:
e issuing the performance scorecard to branches,
e undertaking remote intervention,
¢ arranging for members of the Network Support Field Team to visit
required branches,
e arranging deductions for financial consequences from remuneration,
e resolving queries regarding performance, including disputes about
deductions from remuneration,
e working with the Conformance Contracts Advisors to ensure that a
consistent approach to managing performance is applied,
e informing the relevant network teams to inform them of action that is
being taken against branches that they have a relationship with.
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The Branch Standards booklet and future decisions about which standards
need to be included and the relevant consequences will be owned by the
Network Performance Manager.
New agents: actions for HRSC.
It is important that new agents, on appointment, receive a complete set of the
documents described above. To ensure that happens, HRSC should take steps
to ensure that the contractual change document and accompanying letter /
booklet are sent to new agents along with the main contract and any other
appropriate contract variations for that contract type.
Contacts
Gayle Peacock ~ Network Efficiency Pro
Gayle.a.laverick:
Appendices
Appendix A - Questions and Answers
The following Questions and Answers have been provided to the Network
Business Support Centre and the Human Resources Centre.
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Appendix B - Key Contributors
The following people have provided input to the Branch Standards
Communications.
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