POLB(06)3"
In Strictest Confidence
POLB 06/30 — 06/57
Present:
Sir Michael
Hodgkinson
lan Anderson
Alan Cook.
Peter Corbett
Ric Francis
Graham
Halliday
Allan Leighton
David Miller
In attendance:
Simon Carter
Adam Crozier
Jonathan Evans
Richard Murray
Neil Owen
Will Rainey
Jeff Triggs
Sue Whally
Keith Woollard
Apologies:
Brian Goggin
POLBO06/30
POLB06/31
Post Office Limited
(company no. 2154540)
Minutes of the meeting of the Board
held at 148 Old Street; London
held at 148 Old Street, London
on April 20 wa
a
Chairman, Post Office Limited’
Human Resources Director
Managing Director
Finance Director
Operations. Director
Banking & Financial Services Director
Chairman, Royal Mail Group
Chief Operating Officer
Head of Marketing
Chief Executive, Royal Mail Group
Company Secretary (for POLB 06/30 — 06/38)
Ernst & Young (for POLB 06/37 — 06/38).
Notes
Ernst & Young (for POLB 06/37 — 06/38)
Lawyer, Slaughter & May (for POLB 06/13)
Consultant, McKinsey.
Head of Compliance (for POLB 06/53)
Non-Executive Director
MINUTES OF PREVIOUS MEETINGS POLB(06)2"°
(a) The Board approved the minutes of the Board meeting of
“February 9" 2006.
MINUTES OF JV AND ASSOCIATE COMPANIES
(a) The Board noted the minutes of POFS Board meetings of
27" January and 22" February;
(b) the Board noted the minutes of the FRTS Board meeting of
15" December. The Board further noted that FRTS had
changed its name to First Rate Exchange Services effective
26" March 2006;
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In Strictest Confidence
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Action:
Jonathan
Evans
POLBO06/32
POLBO6/33.
Action:
Dave Miller
POLB06/34
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. Ih Strictest Confidence
(c) the Board noted the minutes of the Post Office Ltd”
Compliance Cominittee.of 22"? March 2006. In view of the
increasing volume of regulatory issues the Board considered
that it'would be. beneficial forthe Committee to recruit
additional éxpertise. The Board agreed that Luke March,
Compliance: Director Royal Mail Group, should’ be asked to
join the Compliance Committee. 7
RESIGNATION AND APPOINTMENT OF DIRECTORS OF
ASSOCIATE COMPANIES
(a) The. Chairman reported the resignation of Roy Keenan as:a
director of POFS,. effective from 31° December 2005. The
Bank of Ireland tiad nominated Des Crowley as his: °
replacement.and in accordance with the shareholders’
agreement between POL and BOI, would also become
Chairman of POFS;
(b) it'Was further proposed that:Alan Cook. be appointed as
Director (and Chairman) of First Rate Exchange Services
Ltd and First. Rate Exchange Services Holdings. Ltd, subject
to:approval by'the Group Nominations Committee. .
STATUS REPORT POLB(06)25
(a) : : The Board noted the:report,-arid that all actions-had'béen !
completed. In addition: the Board‘noted ‘thats: .
(b) ‘the paperto:outlirié potential online business opportunities
for Post Office Ltd over:the next 10 years, and'the ‘analysis
Of product and.agent sales would be deferred until the
formulation of the strategic plan, and may no longer be
required;
(c) Peter Corbett reported that the work to establish the
consequences of the Company's insolvency under various
long term contracts was almost complete, arid inimany
“cases insolven¢y would trigger termination rights;
(d), this year'sub-postinasters Would benefit from the ‘Share In
Success’ payments. The Board agreed that:
(i) a létter informing the sub-postmasters would be:
provided on the day of the SIS payment;
(ii) a discussion with Colin Baker would take place
concerning thé share scheme. that was being
considered by Royal Mail Grouip; .
(iii) sub-postmasters who refused to sell new products
should not be able to béenefit'from, the share scheme.
GHAIRMAN’S BUSINESS.
- 2
In Strictest Confidence
POLBO6/35
POLB06/36
(a)
In Strictest Confidence
Sir Michael Hodgkinson reported oh some preliminary
discussions he had had with Brian Goggin about the future
relationship arrangements between POL and BOI. A joint
dinner was to be held the following week at which the issue
would be. considered further,
MANAGING DIRECTOR’S REPORT
(a)
Alan Cook reported that the strategic plan was progressing
well and a presentation would be made later in the meeting
to update the Board.
FINANCE REPORT POLB(06)26a
(a)
(b)
(c)
(d)
(e)
(f)
(9)
Peter Corbett provided the Board with a presentation on the
Period 12 business performance results:
sales stood at £1,164.7m, which was just £13.5m (1%)
lower than budget;
operating profit (after allocations and pension funding) was a
loss of £119.3m, £11.6m better than budget. However,
Group postings had not yet been completed. The final result
may be slightly. different and would include an adjustment in
the new Mails contract;
Year'To Date cash outflow was £111m versus a budgeted
outflow of £211m. This was £100m better than budget, and
the budget included a £100m reduction in network cash;
the final results for the accounts Were completed on March
30". The.external audit final phase ‘would take. place from
April 3rd ~26"", and the results publicly announced on May
18°;
overall year end company performance had been good: the
customer acquisition.target had been beaten, headcount
was 313 ahead of plan and customer satisfaction was
93.9%. However, the. Have Your Say results were slightly
below target and a presentation would be provided later in
the meeting to outline the actions, which were being taken to
address this;
the impact programme-was nearing completion and on track
to deliver all planned financial benefits. The external
auditors were auditing the new POLFS sub ledger for the
first time which would require additional effort. Some issues
had arisen from the migration of balances from the old
(CLASS) system and these. were currently being resolved
with the auditors. Once the audit was complete the priority
would be the post implementation task of upgrading the
capability level in the Product and Branch Accounting team,
in addition to progressing the next round of headcount
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reductions and leveraging the control and MI benefits of the
new system.
POLBO06/37 SOLVENCY AND FUNDING STATUS POLB(06)26b
(a)
(b)
(d)
‘(e)
Peter Corbett outlined the Company's current financial
position in further detail. It was clear that the Company was
insolvent and that in the absence of support from its parent
company and/or ultimate shareholder it would be unable to
meet its debts as they fell due over the foreseeable future;
it was also reported to the Board that the Government had
agreed in principle, with the support of Royal Mail Group pic
(RMG); to write a letter to the Company (a draft of which had
been circulated to the directors) under which the
Government acknowledged the solvency issues facing the
‘directors of the Company and that the directors were
prepared to continue trading on a going concern basis only
on the basis of the following support:
(i) short term funding to enable the Company to
continue to meet its liabilities as they fell dué over
the next two years, made up of a contribution of
£231m, either from RMG (to the debit of the Mails
Reserve) or direct from Government; plus a loan
facility of £150m from Royal Mail;
(ii) Government's stated intention to‘agree, by 31
Décember,.2006, a long term funding package such
as to.enable the Company'to continue to trade as.a
going concern without putting the Company's
creditors at risk of the Company going into insolvent
liquidation in the then‘foreseeable future; and
(iii) Government's acknowledgement that if such a long
term funding agreement Were not put in place by 31
December (or subsequently failed to receive State
Aid approval) then the Company would be obliged to
consider rationalisation of the network to a
commercially sustainable level on terms which would
be affordable to the Company.
it'was noted that such terms could be difficult in political and
PR terms in the sense that they would be likely to involve
the payment of redundancy and compensation amounts of
substantially less than those which employees and sub-
postmasters may have come to expect. It was proposed
that this might be made clear to Government in reply to the
letter once received;
it was noted that such a letter, though broadly agreed, had
not been received from Government;
after some discussion it was agreed that, assuming that a
letter Were to be received from,Government in the near
future along the lines of the draft produced to the meeting,
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POLB06/38
(f)
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the Company should continue trading as a going concern.
However, the Board should keep the position under regular
review and in particular be prepared to take prompt action to
minimise loss 'to the Company's creditors in the event that,
contrary to the Board's expectation, the long term funding
package from Government failed to materialise in line with
the timetable to be set out in the letter;
it was also agreed that on the basis that such a letter were
received, the Company should prepare its accounts for the
year ended 31 March 2006 on a going concern basis.
However, it would be necessary to agree on appropriate
disclosure in the accounts as to the basis on which such a
conclusion had been reached.
FINANCING UPDATE AND THE CONSEQUENCES OF
POTENTIAL ADMINISTRATION POLB(06)26b
(a)
(b)
©)
(a)
- aid clearance had been approved. Funding assumed to be
Peter:Corbett outlined to the Board the current status of
negotiations with Government for the long term funding
solutions for Post Office Limited;
in the event'that a long term funding package was signed
and agreed by December 2006, this would still require state
aid clearance (estimated to be in March 2007). The POL
directors had already agreed that on the basis of the short
term funding referred to above the Company would continue “
to be a going concern and could continue to trade until state
PR ge
yo
utilised in this period was SNP of £150m p.a. for 06/07 and
07/08, £145m per the 05/06 interim funding agreement and
£230m per the 06/07 interim funding agreement. Provision
of this funding would leave £160m plus interest in the Mails
Reserve. As POL would spend the next year operating on a
manage for cash basis and would not have committed to the
required restructuring of the business this would have a
consequential impact on the total funding package required
to fund the POL transformation.
if the long term funding package was not agreed by
December 2006 or'was delayed sufficiently that the POL
directors no longer had confidence that a longer term deal
would be concluded, a third Interim Funding Agreement
would be required sufficient to give the Directors confidence
that they could ‘continue to trade for 24 months from
December 2006 and March 2007. It was estimated that this
would as-a minimum need to comprise the balance of the
mails reserve. £160m plus interest'— more likely a total of
£300m;
Peter Corbett clearly emphasised that if the long term
funding package was not agreed by December 2006, and in
the absence of a further source of interim funds, the options
facing the directors would reduce considerably. Previously
5
In Strictest Confidence
Action:
Peter Corbett
POLB06/39
POLB06/40
(e)
(a)
(a)
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In Strictest Confidence
committed funding would be insufficiént forthe directors to
consider the Company a going concern without radical
action. The directors would need to immediately restructure
the network within the cash envelope available in order to
continue trading. This would result in a dramatic reduction in
network size to a commercially. robust maximum of 4,000
offices, together with severe measures to reduce DMB.
losses as quickly as possible. This would include the
following politically sensitive actions:
(i) 10,000 subpostmasters would have to be given
immediate notice and payments of Up to12 months
made to compensate for the closure;
(ii). 50% of staff would be made compulsorily redundant
and paid on terms substantially below those offered
by RMG (a maximum of 12 months pay);
the Board agreed that once the comfort letter had been
received from Government, a letter outlining the
consequences of the scenarios above would be sent to
Government to confirm understanding.
FINALISATION OF THE STATUTORY ACCOUNTS
Peter Corbett réported that the draft annual accounts would
be finalised ‘shortly:and would'be available for signature on
or before 17" May subject tothe duly.executed consent
letter,.as discussed earlier, having been received from
Government and Royal Mail Group.
RBS SECURITY FACILITY POLB(06)26c
Irrelevant
In Strictest Confidence
POLBO06/41
Action:
Alan Cook
POLB06/42
(b).
(a)
(b)
(c)
(a)
(b)
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Irrelevant _
STRATEGIC PLANNING PROCESS
Alan Cook and Sue Whally provided the Board with a
presentation on the strategic planning process. The Board
noted the presentation, and in particular that:
nine strategic initiatives and a new organisational. model
would underpin the:development of the Company's five year
strategy: These. were divided into the ‘product pillars’ of
Mails, Financial Services, Telephony and Gevernment
Services, together with the ‘delivery pillars’ of network and
channel strategy and operational efficiency and the enablers
of people and strategy, IR strategy and the relationship with
Group. A programme management structure would be used
to pull all of the activities together;
Adam Crozier pointed out that the product ‘pillar’ of retail
could be added to-the analysis. Allan Leighton explained 8
that the most successful sub-postmasters also had a
convenience store offering. He also asked the Board to note 4 ¢
the successful alliance between FedEx and Kinko in ¥
America, but acknowledged that these two approaches. were ny
mutually exclusive. Mike Hodgkinson suggested that there th
was an opportunity for Royal Mail to provide much more in i]
the way of branded postal stationery to sub-postmasters
who primarily sourced these products from third parties. The
Board agreed that:
(i) the analysis. would be refined by defining the retail
activities which should be excluded;
(ii) further options would be explored which would
consider franchising a minority of DMBs whilst
leaving the remainder commercially viable;
(iii) the branding issue would be re-examined,
particularly the. use of the colour green on Post
Office fascias and mobile Post Offices.
CARD ACCOUNT UPDATE POLB(06)27
Analysis of the existing card-account customer base showed
that of the 4.3m active. account holders, approximately 1m
were customers who could be retained given the cross sell
opportunity they represented. The Board agreed that
retention of these cross-selling should be a priority to
demonstrate that it Could be done successfully;
of the remaining card account customer base, the
Government had accepted that there would always be. a
7
In Strictest Confidence
POLBO6/43
Action:
Dave Miller
(c)
(d)
(e)
(f)
(a)
(b)
(c)
(d)
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number of customers who could not open a bank account.
This was estimated to be 1.25m — 2.5m customers
(including current cheque customers). Post Office. Limited
would develop a new account for these customers;
a meeting had taken place with the ‘minister, James Plaskitt
on 28th March to outline the proposals. He was keen to be
kept updated on developments and was questioned as to
whether the DWP would need to go through a formal
tendering process for the new service. It had been agreed
that'the DWP would not progréss any further migration for
three months to allow time for solutions to be developed.
Two further update meetings were proposed. Allan Leighton
requested clarification concerning the potential upside of this
delay, and this was estimated at between £10m and £20m
with some upside having already been taken to budget;
Government had since confirmed the following timetable:
(i). issué OJU notice mid — late summer;
(ii). issue ITT no earlier than September 06;
(iii) Go live Autumn 07.
the DWP had indicated on 10 April that they would consider
splitting the service, stipulating that any service provider
would have to offer ATM access and allow access to
services:in POL branches. The DWP would also have a
separate. distribution-agreement.with POL;
there was a significant risk that DWP were acting solely in
self interest and had made no consideration of wider POL
implications.
EXECUTIVE REPORTS
SALES & SERVICE REPORT POLB(06)28
The Board noted the report, and also noted that:
. Franchised Offices: there had been a suggestion that Barry
Gardiner’s office had attempted to obtain certain information
in relation to non-customer services. Dave Miller would
contact Jonathan Evans with a view to reminding the
minister of the. ‘agreed way of working’ process agreed with
the shareholder;
Instant Saver: the Instant Saver product had been launched
and a positive reaction had. been received. In the first ten
days £50 million had been deposited, including a single
deposit for £1 million;
Agent Remuneration 2005/06: the end of year figures for the
agency pay budget were below the £525m in the plan. Final
figures. would depend upon what was being accrued for the
following year. Efforts were being focused on keeping fixed
: &
In Strictest Confidence
Action:
lan Anderson
POLB06/44
Action:
Simon Carter
(e)
(a)
(b)
(c)
(d)
POL00021492
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In Strictest Confidence
remuneration increases to a minimum. The annual Core Tier
Review would be implemented from 1° April and was a good
gauge of branch sales performance throughout the year. Of
the 8320 branches affected by PRAG:
(i) 3% (275) were demoted out of commercial status;
(ii) 20% (1629) saw a decrease in pay;
(iii) 19% (1535)stayed the same;
(iv) 57% (4750) saw an increase in pay;
(v) 2%.(131) were promoted to commercial.
. Thé Board agreed ‘that the coveririg letter circulated: for the
Share in Success payments should mention points (ii) — (iv)
to illustrate that the majority of sub-postmasters were better
off despite’ the real difficulties being faced by the Group.
NESP: the NFSP had expressed considerable concern
following discussions about the future of bill payment and
the need to take up to.£12m out of remuneration this year.
The problem would be compounded by the withdrawal of TV
Licence business which would result in a further £3m annual
reduction. These two areas alone could wipe out any pay
rise for sub-postmasters.
MARKETING & DIRECT SALES POLB(06)29 a
The Board notéd the report and in addition that: .
ey
Telephony: 98% of the annual target for Post Office® 3
HomePhone had been achieved at the end of the financial
year. Of the 680,000 customers, 300,000 were ‘live’ and
making calls. It was explained that the difference in the
number of ‘live’ customers should not be a matter for
concern, as.a 40% ‘switch’ rate was one of the best in this
very competetive market. Discussions continued with Cable
& Wireless, NTL, Pipex and Tiscali to support further growth
— principally via the launch of a “Broadband” product. BT
had withdrawn, claiming regulatory issues limited their ability
to offer a credible deal. KPMG had been engaged to help
with the due diligence.on these respective bids;
Sorted: The launch, of the ‘Sorted’ magazine had been
successful, and was providing many of the anticipated
business benefits. However, it had been agreed that the
name of the publication would change for the next edition
due to the unfortunate possible associations with the
imminent BBC television programme of the same name;
the Board briefly discussed the branding strategy of the Post
Office and Royal Mail websites. The Board agreed that
Simon Carter would provide Adam Crozier with suggestions
as to which Post Office Ltd products should be advertised
on the Royal Mail website.
9
In Strictest Confidence
POLBO6/45
POLBO6/46.
POLB06/47
(a)
(b)
().
(a)
(b)
(c)
(a)
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BANKING & FINANCIAL SERVICES POLB(06)30
The Board noted the report and in particular that:
Horizon: the development of PIN change functionality on
Horizon was being taken forward. Initially this would be
used to suppoit the Post Office Financial Services Instant
Saver Account and National Savings and Investments’ Easy
Access Savings Account. Post Office Financial Services
had agreed to contribute £100K to the development cost of
£300K, and.a similar contribution was being sought from
NS&I. It was anticipated that this service would be available
towards the end of 2006;
LINK: an initial meeting had been held with LINK to progress
a separate scheme for ‘over the counter’ withdrawals. The
target date forestablishment'was 13th July, but a full
business case would be developed before any commitment
was. made.
OPERATIONS REPORT POLB(06)31
The Board noted the report, and in particular that:
Horizon S90 Release: This release would:
(i) transfer Bureau debit/ credit card transactions to the
counter fromthe stand-alone device;
(ii) introduce controls to ensure debit/credit cards are
applied to the-correct trarisactions;
(iii) introduce.a genericout payments product that will in
thé first instance be used to re-engineer the Postal
Order product, with enhanced processes for the
control of‘stocks of foreign currency;
(iv) provide-for a plethora of change requests across a
variety of existing capabilities.
The release continued to make good progress. There had
been.a number of issues in the pilot but these had been
quickly diagnosed and resolved: The Bureau debit/credit
card solution was now live in.all on demand branches.
Postal Orders would be fully piloted next week having had a
successful private pilot (employees and family);
Network Resilience: the software necessary to deploy an
ISDN secondary network for 2000 larger branches and the
GSM solution to limit the period of downtime for smaller
branches‘was now ready for implementation.
HUMAN RESOURCES REPORT POLB(06)32
The Board hoted the report and in addition that:
10
In Strictest Confidence
POLBO06/48
(b)
(c)
(a)
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Industrial Relations: the CWU had indicated that further
conversion and closure announcements for London during
April would result:in:a ballot for industrial action. This would
probably be confined to London, but there would be a small
tisk of nationwide support. A mandate for pay discussions
had now been obtained from RMG. Unfortunately the CWU
had decided to write to all their members criticising the
business for the lack of progress. A joint vision statement
had been produced for the cash business and further talks
continued to identify how this area could move into profit. It
was anticipated that an agreed solution could be achieved;
Health & Safety: all accident performance measures
achieved their target and performance compared to both the _
rest of Group and external measures remained strong.
Royal Mail (excluding POL) was currently running at 32.2
. absence accidents per 1000 employees against a POL year-
end rate of 7.4 absence accidents per 1000. Absence
‘resulting from accidents’ per 1000 employees was on target
with a 10% reduction on last year. Latest HYS H&S
performance showed a further decline to 58.3%, and this
would be discussed later in the meeting. Health & Safey
audit results show a 92.7% compliance rate with results
ranging from 73% to 100% compliance. Personal Injury (PI)
Claims remained steady with an estimated liability of £1.3m
and Legal costs of £0.7m. Absence related to psychological
trauma following attacks in Cash Services was down 36.4%
on last year at 1889 days, which mirrored the reduction in
the number of attacks. Reports of firearms being carried
during attacks are down from 37 to 21. Discharging of
firearms was down from 4% to 3%. Absence related to
mental health had increased against last year by 7.3% from
42,632 to 45,750 days.
SALES REVIEW POLB(06)33
Simon Carter provided a sales review to the Board. The -
Board noted the presentation and in particular that:
The key findings of the review were that:
(i), there was no geographical trend. as to where
branches were more effective at selling;
(ii) retail (i.e. PostShop) sales-were flat through the
year, and down year-on-year;
(iii) asmall.percentage of branches. were. responsible for
the majority of sales — especially DMBs;
(iv) franchising a DMB had an adverse impact on sales;
(v). -branches who score highly for “+1 service” and I
Retail Standards conformance sold more products;
(vi) bonus incentives for colleagues could help them start
selling products that they had previously felt difficult
to sell;
14
In Strictest Confidence
(b)
Action:
Alan Cook
POLBO06/49
(a)
POLBO06/50
(a)
(b)
Action:
Alan Cook
lan Anderson
POLB06/51
(a)
(b)
In Strictest Confidence
(vii) older & lower socio-demographic groups were
increasingly more inclined to buy new products;
(viii). web sales were growing rapidly, and had attracted a
younger, more affluerit customer to the product
range; ee .
(ix) The “£50 customer incentive” proved an enticing
incentive for customers but the £25 incentive had
failed;
(x) Brand reputation was in decline, which indicated that
hard sales. push (or poor technique) was having an
adverse effect.
after some discussion it was apparent to the Board that
solving the problem of loss-making DMB offices should
remain a high priority. The Board agreed that two large
meetings would take place at which 250 DMB manager
attendees would be invited. These would be run along the
same lines to those of Royal'Mail, for communicating with its
Delivery Office Managers.
OD REVIEW
lan Anderson provided a presentation to the Board. The
Board noted the presentation.
PAY NEGOTIATIONS UPDATE
lan Anderson provided an oral update of the pay
negotiations:
the current pay increase. mandate of 2.4% would be
challenging forthe union to accept as it would be the lowest
pay rise in the Group;
after some discussion of the various strategies that could be
employed to help ensure a successful outcome, the. Board
agreed that Alan Cook and Jan Anderson would progress
within the.agreed mandate.”
HAVE YOUR SAY POLB(06)36
lan Anderson provided a presentation on the Have Your Say
results. The Board noted the presentation and in particular:
the ‘I enjoy working here’ for the year closed at 58% which
was down 4% on the previous year. The drop was entirely
attributable to the results of the DMBs, as the scores in
Cash Centres, CiT and administration were all improving;
in order to address the issue at the DMBs, the following
actions were being taken forward:
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In Strictest Confidence
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(a)
(b)
Action:
Ric Francis
POLBO06/53
(a)
(b)
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In Strictest Confidence
(i) HYS guidance packs for low scoring branches;
(ii) upgraded Work Time Learning intranet site;
(iii) Firstline Fix pack ready for distribution;
(iv) activities would be put in place to mirror the
successful work instigated in Cash Services, (e.g.
adopting HYS champions);
(v) amore structured approach to supporting ‘safety net
offices’ would be provided;
(vi) engagement strategy around conversion
programme;
(vii) supplementary, targeted root cause analysis (via
Fusco);
(viii) a review would take place of the.entire. WTL offer.
HORIZON NEXT GENERATION POLB(06)37
Ric Francis presented a paper which would be taken by the
Royal Mail Holdings Board on April 27" 2006. The paper
requested approval in principle for the replacement of Post
Office. Ltd's Horizon Electronic Point of Sale system, subject
to securing long term funding. Approval of £25m interim
funding was required in order to enable the programme.to
be continued. Any delay in this programme would result in t
£44m of irrecoverable benefits being foregone over the e
course of the existing agreement;
after some discussion the Board agreed the paper subject to Fa
further investigation to determine whether:
(i) the business case could be split into 2 parts to
approve £13m now and £12m later;
(ii) activity could be further de-risked.
REGULATION AND TREATING CUSTOMERS FAIRLY
POLB(06)38
Graham Halliday introduced Keith Woollard to the meeting
who provided a Regulation presentation to the Board. The
Board noted the presentation and in particular that:
the Financial Services Authority had shown increased
interest in the Bank of Ireland's joint venture and in Post
Office Limited..For the first time FSA supervisors had asked
to meet Post Office Limited’s Head of Compliance, and this
could be followed by requests to meet directors with
accountability for regulated activity. A likely area on which
questioning would focus was the FSA’s on-going theme of
‘Treating Customers Fairly’. The FSA had stated that this
principle must be ‘adopted and supported by the leadership
of financial firms.and embedded throughout a firm’s
operations and within its culture’;
the main risks for Post Office Ltd had been identified as:
13
In Strictest Confidence
‘POLBO6/54
(c)
(a)
(b)
(c)
" In Strictest Confidence
(i) areas-of concern in respect of general insurance,
sales practices and PPI in particular which the FSA
had indicated they would follow up;
(ii) there is an inherent risk in the size and nature of the
network that poor sales practices would persist and
lead to damage to our reputation and direct costs
from an:intervention by FSA or by the Bank:of
Ireland;
(iii) an investigation by or for the FSA could damage
individual director's reputations and in an extreme
lead to financial penalties
Post Office Ltd had set in motion me following actions to
help offset these risks:
(i) to focus-on raising standards of compliant sales
practices, competence in the Sales Line and across
the network;
ti) to treat customers fairly would be integral to the
vision centred on delivering for customers;
(iii) to promote standards of operational excellence in the
Network that would meet the business need to
reduce operational risks whilst also matching
customers’ expectations of being treated fairly.
ATM LICENSING AGREEMENTS POLB(06)39
Post Office Ltd and Bank of Ireland recently signed a
contract to install at.least 1,500 ATMs over the next five
years. As part of the contractual requirements to install
these ATMs, it would be necessary to. complete and sign an
individual. licence agreement for each ATM that was
deployed. The licence agreement will normally be for eight
years;
currently, any legal document / licence. that was signed on
behalf of Post Office Ltd must be signed at director level or
by the Company Secretary. Given the significant volume of
licence agreements to be signed it would be prudent, for
practical reasons, to delegate the signing of these ATM
licence agreements to a maximum of four senior managers
within the Product team of the Banking & Financial Services
directorate. The. senior management team had the requisite
knowledge and experience to be able to sign the individual
ATM agreements on behalf of Post Office Ltd, and would
receive a specific letter-of delegated authority;
the Board agreed ‘to delegate authority in respect of the
signing of individual ATM licence agreements to the senior
management within the Product team (part of the Banking
and Financial Services directorate.
14
In’Strictest Confidence
POL00021492
POL00021492
POLBO6/55
(a)
POLBO6/56
POLBO6/57
(a)
POL00021492
POL00021492
Jn Strictest Confidence
SEALINGS POLB(06)40
The directors approved the affixing of the common seal of
the Company to the documents set out against item number
48/06 and 76/06 inclusive in the seal register:
ITEMS FOR NOTING
» The Board also noted the following papers:
(i) Achievement of 845k Sales Target;
(ii) POL Environmental Strategy and Performance;
(iii) POFS Operating Plan;
(iv) PR Update.
CLOSE
There being no further business, the meeting was closed.
15
In Strictest Confidence