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Initial Complaint Review and Mediation Scheme
Provisional and draft
Not approved by POL and not discussed by the
Working Group
MEDIATION BRIEFING REPORT
PART TWO
Second Sight — 5 August 2014
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 Applicant's claims
through the Scheme
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1,
1.1.
1.2.
1.3.
1.4.
2.
2.1.
2.2.
2.3.
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Introduction
This 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
into a number of matters raised by Subpostmasters, or former Subpostmasters.
Part One of our Briefing Report (‘Part One’), issued on 25 July 2014, describes some aspects of
Post Office branch operating procedures and related functions of the Horizon system.
The purpose of this report is to expand on the main common ‘Thematic Issues' that have been
raised by many Subpostmasters in their applications to the Mediation scheme. This has been
done in the interests of efficiency and in order to avoid duplication of facts and conclusions
across many cases.
The report structure follows a modular approach, with each Thematic Issue forming a separate
section within the report. This may be added to or modified as new findings emerge.
The Contract between Post Office and Subpostmasters
This section deals with two separate issues. Firstly the impact on Subpostmasters of some of
the terms and conditions set out in the Contract and secondly, issues relating to the notification
to Subpostmasters of the terms of the Contract.
The following extracts are taken from the ‘Standard Contract' (dated September 1994) between
Post Office and Subpostmasters. This is a 114-page document, that now incorporates several
post-1994 amendments. A copy of the entire document is available on request.
The Standard Contract contains a number of provisions, the most significant of which are set
out below, especially those related to responsibility for losses and shortages. As a result of
these provisions the contract transfers several financial and other risks to Subpostmasters who
may not have understood or appreciated those risks, particularly if they failed to seek
independent legal advice before taking up their post. Observations relating to the more
significant of these clauses are set out more fully below.
The Standard Contract spells out the rights and responsibilities of both Post Office and
Subpostmasters. The clauses most frequently referred to by Sub-Postmasters are as follows:
a) Section 17: (in the November 2002 amendment) which lists the Key Products and
Services (also referred to as the core products and services).
b) — Section 15: (in the November 2002 amendment) refers to responsibility for the training
of the Subpostmaster and, in turn, of the staff employed in a branch. Under this
section the Post Office undertakes to provide the Subpostmaster with relevant training
materials and processes to carry out the required training of his Assistants on the Post
Office Products and Services... and the Sub-Postmaster accepts the responsibility to
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d)
e)
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ensure the proper deployment within his Post Office branch of any materials and
processes provided by Post Office Ltd and to ensure that his Assistants receive all the
training which is necessary in order to be able to properly provide the Post Office
Products and Services and to perform any other tasks required in connection with the
operation of the Post Office branch.
Also... Post Office Ltd may request from time to time that where it has obligations as
described above the Subpostmaster should conduct specific training (whether through
written/distance learning that may require confirmation of completion or via
presentations) in relation to certain Post Office Services (such as, but not limited to,
money laundering). Failure by the Subpostmaster to arrange for such training to be
properly applied will be deemed to be a breach of this Contract by him.
Section 1, paragraph 10: which requires three months notice of contract termination
from the Subpostmaster to Post Office and allows Post Office to:
terminate a Subpostmaster’s contract at any time in case of Breach of Condition by the
Subpostmaster, or non-performance of his obligation or non-provision of Post Office
Services, but otherwise may be determined by Post Office on not less than three
months notice.
In section 12 of the Standard Contract there are a number of paragraphs, as set out
below, addressing responsibility for losses and shortages. These paragraphs are at the
heart of nearly all of the cases being considered.
Section 12, paragraph 12:
The Subpostmaster is responsible for all losses caused through his own negligence,
carelessness or error, and also for losses of all kinds caused by his Assistants.
Deficiencies due to such losses must be made good without delay.
Section 12, paragraph 13:
the financial responsibility of the Subpostmaster does not cease when he relinquishes
his appointment and he will be required to make good any losses incurred during his
term of office which may subsequently come to light.
Section 12, paragraph 14:
surpluses may be withdrawn provided that any subsequent charge up to the amount
withdrawn is made good immediately.
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g) Section 12, paragraph 17:
Subpostmasters may exceptionally not be required to make good the full amount of
certain losses at his office. If he feels entitled to relief in making good a loss he should
apply to the Retail Network Manager.
h) Section 19, paragraph 12: deals with enquiries by officers of the Post Office
Investigation Division and states that:
The main job of the Investigation Division is to investigate, or help the Police to
investigate, criminal offences against the Post Office, British Telecommunications and
the Department of National Savings. The Investigation Division does NOT enquire into
matters where crime is not suspected.
i) Section 19, paragraph 19: allows persons interviewed by Post Office's Investigators to
have a friend present during the interview but that that person may not interrupt in any
way, either by word or signal.
2.5. Having considered the Standard Contract in some detail we are of the opinion that the terms of
the contract appear to be biased in favour of Post Office and can, in some circumstances,
operate to the detriment of the Subpostmaster. Also, we have not seen any evidence that Post
Office either advises or requires the Subpostmaster to seek independent legal advice before
taking up their post. We are also unaware of any cases where Post Office was prepared to vary
the terms and conditions of the Standard Contract at the request of the Subpostmaster.
2.6. The Standard Contract transfers financial and other risks to Subpostmasters who may not have
properly understood or appreciated those risks, particularly if they failed to seek independent
legal advice. Consequently, there is a risk that appropriate risk mitigation measures may not
have been implemented by the Subpostmaster. Post Office has the power to require
Subpostmasters to implement new products and services and failure to do so represents a
breach of contract that could give rise to suspension or dismissal. The risk here is that Post
Office could implement decisions from which it reaps the benefits (such as by reducing
operating costs) while the risks (and therefore the costs) fall onto the shoulders of the
Subpostmasters who have no choice other than to accept the decision.
2.7. Post Office controls the Horizon infrastructure including back-office accounting functions. A
consequence of this is that Post Office may hold Subpostmasters accountable for shortages that
they are unable to fully investigate. A Subpostmaster has very limited options in these
circumstances and often has to make good losses where the underlying root cause has not been
established.
2.8. Many Subpostmasters are unaware that, under Section 19, Paragraph 12 of the Standard
Contract, the Post Office Investigation Division (‘POID’) does not have a mandate to provide
general investigative support to Subpostmasters. There is therefore no general investigative
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2.9.
2.10.
2.11,
2.12.
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function readily available as POID only seems to have a mandate to act (though it is not
required to act) where criminality is suspected.
We also note that when a POID criminal investigation is in progress, the interviewee is not
allowed to be legally represented, although they may be accompanied by a ‘friend’, which could
be considered to be unfair.
We have been told by many Subpostmasters that they were not given a copy of the 114
page Standard Contract until long after they had committed to purchase their sub-post office;
or long after they had started work as a Subpostmaster, or even at all. We are advised that in
some cases, a copy of the Standard Contract was not provided until Post Office commenced
litigation. Post Office has stated that its standard operating procedures require that
Subpostmasters are provided with a copy of the Standard Contract no later than the day that
they start work but this often seems not to have happened.
We have also, as yet, seen no example where any Subpostmaster at any point signed the
Standard Contract itself. Rather, the practice seems to have been for new Subpostmasters to
sign an ‘Acknowledgement of Appointment’ letter which includes the following text: "/ accept
the Appointment as Subpostmaster at XXXXX Branch and agree to be bound by the terms of my
contract; and by the rules contained in the book of rules and the instructions contained in those
postal instructions issued to me".
It is worth noting that, in many cases, evidence of the provision of the Standard Contract (or
of any document having been signed by the Subpostmaster) has not been retained by Post
Office.
3. Automated Teller Machines (ATMs)
3.1.
3.2.
3.3.
3.4.
3.5.
Our Part One Report provides, in sections 5.23 to 5.29, background information on the
installation and operation of Automated Teller Machines (ATMs).
When a Post Office branch is equipped with an ATM it can be located either within or external
to the branch premises. The installation of an ATM at a branch is often desirable as it can
result in greater footfall and, as a consequence, increased sales of Post Office products and
services. All of the problems that we have as yet encountered relate to external ATMs.
The reported problems have included both small and large shortages that were charged back to
Subpostmasters by Post Office. In other cases large surpluses occurred, which caused concern
to some Subpostmasters.
Most of the reports that we have seen relate to Bank of Ireland ('Bol') ATMs and some to
HANCO, as well as to other ATMs.
The normal cash dispensing process on Bol ATMs involves electronic interaction between the
Branch's ATM; Wincor Nixdorf (the service and maintenance provider); the LiNK platform and
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3.6.
3.7.
3.8.
3.9.
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the customer's bank. The ATM cash balancing/reconciliation process involves electronic and
also manual interaction between the Branch's ATM; the Branch's Horizon system; Post Office's
Financial Service Centre (the 'FSC'); and Bol. This is a more complex arrangement, requiring
greater human intervention at the end of the business day, than that typically deployed by most
high street and other banks whose ATMs are seamlessly connected to their own computer
systems.
One notable problem, reported by several Applicants using Bol ATMs, seems to relate to the
manual (rather than electronic/automatic) extraction and use of the ‘cash dispensed' figures
from the ‘Bank Totals' receipt that Subpostmasters are required to obtain each day from their
ATM and the daily input of ‘cash declarations’ into Horizon. This is sometimes referred to by
Subpostmasters as "the problem with the ‘air gap' between ATMs and the Horizon system".
In February 2008, Post Office issued an 'Operations Manual interim’. Post Office stated that it
was issuing new instructions because "a number of non-conformance issues are still affecting
the processes for ATM reconciliation and settlement and to explain the correct end-to-end
accounting processes relating to Bank of Ireland ATMs" .
The Introduction to the Operations Manual interim stated:
The Bank of Ireland, via the LiNK network, extracts a 16:30 - 16:30 ‘cash dispensed’ figure
automatically from your ATM each day. This figure forms the basis of a settlement to Post
Office. This figure is the value of cash dispensed from your ATM from 16:30 the previous day
until 16:30 on the current working day. In other words, the amount of cash dispensed to
customers, from each branch's ATM during the previous 24 hours (or during the previous
72 hours between Friday at 16:30 and Monday at 16:30), would be available to Bol and that
data would be extracted by Bol from each ATM.
The Operations Manual interim goes on to say:
In order to meet the required business accounting standard, branches are required to obtain
each day the 16:30 - 16:30 ‘cash dispensed’ figure from the ‘Bank Totals’ receipt which is
available from the Bank of Ireland ATM, and to enter this figure on the Horizon system on a
daily basis. The Manual later describes that as needing to be done each day after 16:30 but
before 19:00.
The Manual continues:
In Product and Branch Accounting (P&BA) a comparison is made between the LiNK generated
figure and the figure you enter on Horizon. If the totals differ, they are queried with Bank of
Ireland and may result in a Transaction Correction sent to your branch. If you do not enter
the daily 16:30 - 16:30 ‘cash dispensed’ figure on Horizon, this means that the settlement
figure by Bank of Ireland cannot be confirmed. In this case the two sets of figures are
automatically reported as differing, resulting in reconciliation problems.
3.10. In addition to obtaining the cash dispensed figures from their ATM and entering it into
Horizon at the right time of day, Subpostmasters were also instructed to make a daily cash
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declaration (and do this every day including on days when the branch closed before 16:30 hrs)
through their Horizon terminal. Specifically:
You must make a daily cash declaration on the Horizon system for the separate stock unit
you have set up for ATM transactions (including days when you close before 4.30pm (16:30
hours) and you have logged on to the ATM stock unit). Unlike cash declarations for your
counter stocks, however, you do not need to make a physical count of the cash contained in
the ATM in order to complete the declaration.
You must make the declaration before 7pm (19:00 hrs) and you must include all funds stored
in your official safe that you have received on a Remittance specifically for your ATM.
3.11. It would appear that some Subpostmasters either misunderstood the instructions or were
told by Helpline staff, when they were investigating differences, that "the problem will sort itself
out" (though it did not) and they subsequently found that the Helpline's advice was later
countermanded. This comment and other similar ones referring to Helpline advice is found in
nearly every instance where there were problems with the operation of an ATM.
3.12. A consequence of getting things wrong with the ATM cash dispensed figures was that an
out-of-sync situation could develop where the branch's ATM would be expected (by Bol and by
Post Office) to have an amount of cash in its cassettes that was different from the cash figure
that the Subpostmaster had entered into Horizon.
3.13. This out-of-sync situation and associated reconciliation difficulties, became, it seems,
commonplace in some branches prior to the February 2008 release of the Manual Update.
3.14. Indeed, the Manual says:
If following the instructions contained in this workaid means that the way you will now enter
data on Horizon and balance your ATM cash will change (for example, if you have previously
entered figures which are not based upon the 16:30 - 16:30 figures or if you have not
completed this task daily, moving to the correct process is likely to result in a cash balancing
difference).
If this is the case, P&BA will issue a Transaction Correction, to address the cash balancing
differences, and will try to provide clear evidence and as much information as possible to
help with correcting transactions. The correction assumes that all previous ATM dispensed
figures have been recorded on Horizon accurately and that branch cash has been correctly
declared.
3.15. Many Applicants have commented on the complexity of the processing of ATM figures in
Horizon and the general lack of clarity and hence ease of use of the guidance and instructions
issued by Post Office. The February 2008 instructions represent a good example of this
complexity and the following extracts demonstrate how easy it might have been for some
Subpostmasters to make mistakes, even after the new instructions were released:
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From the paragraph titled Loading cash into the ATM:
Always enter in the ATM the number of notes loaded in the machine, not the value
Ensure that you enter the number of notes you are loading, not the amount already in
the ATM
Please remember: At the weekly balance all figures are cleared. Therefore, you will
need to enter all amounts in total when you reload the machine next.
3.16. The following extract is from the paragraphs dealing with Weekly balancing and recording
figures on the Cash Management Sheet:
You must make a physical count of the cash in your ATM at least once a week and record the
figures on the Cash Management Sheet before removing the cassettes for your physical
check of the cash. You must not enter any of the figures on the Horizon system. The weekly
balance can be carried out on any day of the week, even at the end of a Branch Trading
period as long as your premises are closed to the public. It should be completed at any time
after 16:30 hrs when the Disp 16:30 — 16:30 figure has been entered.
Please note: You do not have to reconcile the cash in your ATM with the cash declaration you
make on Horizon. The ATM is balanced using the Cash Management Sheet as described
below. If the Cash Management Sheet balances, your ATM has balanced.
... and the following extract is from the paragraphs dealing with /f the Cash Management
Sheet balances, but there is a discrepancy on Horizon:
The Horizon system should not be recording a discrepancy in the ATM stock. If a discrepancy
is not rectified, it will give you a wrong carried forward figure and the problem could be
compounded. If there is a discrepancy on Horizon but the Cash Management Sheet balances,
you could have entered incorrect figures on the Horizon system.
Go back through your receipts and double check that the 16.30-16.30 ‘cash
dispensed’ figures for each day have been entered correctly on Horizon
Check that any ATM cash originally remitted into a counter stock has been
transferred into the ATM stock
Check that the transfer into the ATM stock has been accepted
Double check that the daily cash declaration has been completed accurately
If you cannot resolve the discrepancy, do not phone the Wincor Helpdesk; please
phone the NBSC for advice.
3.17. The Subpostmasters, in virtually every case that we have reviewed, state that they had no
idea what was causing the out-of-sync situation. Of potential significance is whether the
problems reported occurred before or after the February 2008 Manual update as the new
instructions should have reduced or eliminated the potential for errors. If the branch's ATM
was operating after the 16:30 Bol ‘cut-off' time during the week and/or at weekends (as would
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clearly be the case with externally located ATMs), then the transaction volumes and associated
accounting entries on the following Monday would include all cash dispensed in the preceding
72 hours between 16:31 on the previous Friday afternoon and 16:30 on the following Monday
afternoon.
3.18. We have also been told that when ATM-related reconciliation and out-of-sync problems
were reported to the Helpline, Subpostmasters were often told to ignore the shortfall because
it will sort itself out. This advice runs the risk of allowing a large shortfall to build up (see "and
the problem could be compounded" in 3.16 above), whilst awaiting the possible issue of a
Transaction Correction, rather than dealing with the underlying problem. Inadequate and
possibly inappropriate advice, particularly prior to the 2008 Manual update, appears to have
been frequently provided which may have resulted in Subpostmasters eventually giving up
trying to understand and resolve problems and hence coming under pressure to falsely account
as part of a temporary solution to an as yet unresolved problem.
3.19. I Many Subpostmasters have commented on the apparent impact on their branch's ATM of
power or telecommunication failures. There are standard processes in place to deal with power
cuts and connectivity interrupts to ensure that data is not lost or corrupted when those events
occur. Nonetheless, the need in such circumstances for an ATM to be re-booted by the
Subpostmaster, or for it to be remotely re-booted by Bol, could introduce the risk of data loss
or corruption. Post Office has given assurances that this cannot happen, and that it never has
happened, but some evidence seemingly contradicts those assurances. Post Office and Second
Sight are making further enquiries on this subject.
3.20. There have been many reported instances where a cash withdrawal cannot be completed
due to a problem occurring during a transaction. Depending on when the problem arose it is
possible for cash that should have been dispensed to the customer to be withheld by the ATM
but the customer's bank account nevertheless debited.
3.21. In addition when cash is dispensed by an ATM, but there is a delay in the customer physically
removing the cash from the ATM, then after a set period the ATM will retain the cash. This is
known as a retract.
3.22. In most instances such retracts occur because customers get distracted and fail to take the
offered notes within the pre-set timeframe (usually 60 seconds). Sometimes, a customer will
walk away from the ATM without taking the dispensed cash at all. In such instances, the
customer's account will be debited and, in due course, his account will be re-credited once (if
he remembers his mistake) he contacts his bank to report what happened. Those notes should
have been found, at the end of that day, in the ATM's ‘retracts bin’. All that is innocent and not
a cause of problems to any Subpostmaster.
3.23. It is, however, in our view possible that some of the large discrepancies reported by
Subpostmasters could have included losses brought about by external theft where
sophisticated methodologies had been deployed (such as retract fraud or the more advanced
transaction reversal fraud). The risk and consequences of this sort of theft/fraud, and the need
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to thoroughly investigate all reported instances of apparent ATM cash shortfalls has been
discussed at length with Post Office. As yet we are not satisfied that adequate investigative
work was in such cases carried out. We are aware of a lengthy project, carried out by Post
Office in 2012, to react to increasing retract fraud but we have been told that no report was
produced and we have, as yet, been unable to check whether any Subpostmasters were held
accountable for losses that were, or might have been, attributable to external ATM fraud/theft.
4. Motor Vehicle Licences
4.1.
4.2.
5.
5.1.
5.2.
5.3.
5.4.
Not all branches are authorised to issue Motor Vehicle Licences (‘MVL') and only a small
number of Subpostmasters have reported problems with MVL processing. We have seen
however, repeated instances of a particular problem. This relates to V11C forms that were
misprinted with an incorrect bar code. This seems to have resulted in Horizon recording the
sale of a 12 month tax disc, when in fact a 6 month tax disc was sold.
If this error is not immediately noticed at the Horizon terminal, a discrepancy, being the price
difference between the 6 and 12 month MVL Tax Discs, will occur and the Subpostmaster will
later be held accountable for the resultant cash shortfall. In branches issuing large numbers of
MVLs this may become a significant amount.
National Lottery
Not all branches sell Lottery tickets or Lottery Scratch Cards. Where these items are sold, they
are usually sold from the co-located shop's retail counter, rather than from the Post Office
counter, even though they have to be accounted for using the Horizon terminal at the Post
Office counter.
There is often a significant difference in the opening hours of the counter in the retail shop and
the shop's Post Office counter. The retail counter will therefore be selling Lottery
tickets/Scratch Cards outside the hours where the Horizon system is operating at the Post
Office counter. Since branches are not allowed to sell National Lottery products other than
through the Post Office, each day's ticket sales have to be recorded, the following morning, in
Horizon. Also, before any Lottery Scratch Cards can be sold, they must first be 'Activated' on
the Camelot terminal and then 'Remmed in' to Horizon.
We have received many reports where Subpostmasters have stated that their branch's Horizon
system would get out-of-sync with the quite separate Camelot system, thereby generating
material surpluses or deficiencies that were eventually corrected by Post Office issuing
Transaction Corrections (TCs) through the Horizon system. The average Lottery-related TC was
approximately £650 and many of these TCs were for amounts that were exactly divisible by
£160, that being the value of a full pack of Scratch Cards.
These problems appear to have been most serious and frequent between 2005 and February
2010, when Post Office made a significant change to its standard operating procedures that
made it impossible, after that date, to have packs of inactive Scratch Cards recorded in Horizon
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5.6.
5.7.
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at the same time as in the Camelot system. A further important improvement was made in
February 2012 when Post Office introduced a system change that finally eliminated the
possibility of synchronisation errors between the Horizon and Camelot systems.
We have also been told by Applicants that, before these important system improvements were
introduced, inconsistent and sometimes conflicting advice was provided by the Helpline which
further exacerbated the problem.
The out-of-sync problem was particularly prevalent in branches where the retail shop sold
Lottery tickets late into the evening, after the Post Office counter had closed. A further
complication often occurred on the final Wednesday evening of the monthly Trading Period.
Subpostmasters were required to reconcile the Horizon/Camelot figures as a priority task on
the Thursday morning, rather than at 17:30 on the Wednesday, but this requirement was not
always advised by the Helpline. It is not clear whether the training and support that
Subpostmasters received covered this important point.
A specific example of the Camelot/Horizon synchronisation issue is described in Appendix 4 to
our Interim Report dated 8th July 2013 and this provides further important information about
this matter.
6. Training, Support and Supervision
6.1.
6.2.
6.3.
6.4.
The nature and extent of training provided by Post Office has developed over the years and is
described in our Part One Briefing Report. The training is probably adequate for people who
have reasonable levels of IT skills, numeracy and accuracy, though further product-specific
training, rather than the use of Operating Manuals, is probably needed for some
Subpostmasters, especially those whose branches deliver a wide range of products and
services.
We have been repeatedly told that the basic training presented to Subpostmasters was
probably adequate in regard to general ‘Business as Usual' Transaction Processing, but was
predominately sales-focussed and was rated as being poor in regard to end of day, and
particularly end of Trading Period, balancing. There was little or no coverage of how to deal
with discrepancies (both surpluses and shortfalls); how to identify the root causes of recurring
problems; or how to deal with Transaction Corrections.
We have also heard many examples of Subpostmasters who for many years prior to the
installation of the Horizon computer system typically had monthly surpluses of just a few
pounds (less than £30 seemed to be the norm) and that they first experienced large
discrepancies shortly after the Horizon system was installed.
It would appear that since they or their staff only started making mistakes after the new system
was launched then that indicates that they had either been insufficiently trained or that the
new screen-based counter processes had introduced new ways of making mistakes that neither
the system itself, nor anyone in Post Office, was helping them avoid or detect.
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6.6.
6.7.
6.8.
6.9.
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We note that the duration of Basic Training has varied widely over the years and is now far
more extensive than it was in 1990 - 2010 (the pertinent period for many of the Applicants).
Post Office refers to the current routine provision of two week's training for Subpostmasters.
We have found many examples where Subpostmasters received fewer than two day's training
and were simply handed Operating Manuals for self-study and to train their counter staff.
Post Office's Trainers do not seem to be well regarded by many Subpostmasters and appear to
have been particularly weak when dealing with ATMs; Lottery processing; Motor Vehicle
Licences; Foreign Currency; and other specialist products.
This problem is compounded by the fact that many of Post Office's own Auditors/Investigators
and Line Managers had very limited knowledge of Horizon processes, so were also unable to
provide any meaningful guidance or support.
Subpostmasters are responsible for training and supervising their own staff. Post Office has,
under its contract with Subpostmasters, no responsibility to train staff other than in Crown
Offices. Post Office does provide Subpostmasters with relevant training materials, but it does
not exercise any quality control function in order to ensure that this further training is properly
delivered.
We question whether a counter process involving over 170 products, operated by staff of vastly
differing levels of intellect, experience, numeracy and attention to detail can be expected to
work well with such limited oversight and monitoring by Post Office. Once again we suspect
that this lack of effective oversight is due to a business model that transfers substantially all of
the risk to Subpostmasters and provides little incentive for Post Office to ensure effective
training and support is provided to Subpostmasters and staff.
7. The Helpline
71.
7.2.
We have heard many examples where the Post Office's Helpline has failed to provide any
worthwhile support when called. Specific criticism has included:
a) unhelpful, script-based, responses;
b) — many calls, including those seeking help on balancing problems and discrepancies,
were afforded ‘Low Priority’ by the Helpline staff;
c) instructions received during one call that are said to have later been countermanded,
sometimes months later, by another; and
d) — difficulty in contacting the helpline due to its limited availability.
A frequently recurring response by the Helpline is said to have been:
“don't worry about it (the shortfall), it will sort itself out".
Many Applicants have reported that problems did not sort themselves out, nor was any
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8.2.
8.3.
8.4.
8.5.
8.6.
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indication ever given by the Helpline as to how long they should wait before realizing that a
problem that had not sorted itself out would probably not now do so, nor how they were
supposed to balance the books during the intervening period.
Limitations in the Transactional ‘Audit Trail’
Many Applicants have claimed that they were unable to determine the root causes of
discrepancies (both shortfalls and surpluses) reported by Horizon, because the underlying
transaction data was not made available to them.
The concerns fall broadly into three areas:
a) data that isn't available even on the day of the transaction;
b) data that was at first available, but after 42 days (later extended to 60 days following a
system change by Post Office) is no longer available; and
c) data that isn’t available after suspension.
Data that isn’t available even on the day of the transaction
Applicants' concerns principally relate to transaction types where Horizon produces, at the end
of day, only an aggregate amount and volume for that day's transactions (e.g.: Transactions: 35,
Value: £17,112.55).
This occurs, for example, where customers have paid for goods or services by Debit or Credit
Card.
In the event of an end-of-day discrepancy for one of these transaction types, and without the
benefit of a disaggregation of a total amount into its constituent transactional components,
Subpostmasters found it difficult, if not impossible, to identify the individual transaction(s) that
brought about the discrepancy.
Typically, a Subpostmaster would need to find items:
a) that should have been, but were not, included in the aggregate total; or
b) amounts that had been incorrectly entered, such as £50.00 entered as £500.00, £39.00
entered as £93.00; or
c) amounts that formed part of the aggregate total, but should not have been included in
that total at all.
Only by finding those errors and omissions could the Subpostmaster begin the process of
correction and loss mitigation. That may sometimes have involved contacting the relevant
customer but in order to do that he needed not only to identify the incorrect or missing
transaction but also to know the name, and perhaps also the address, of the relevant customer.
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Many Applicants have told us that, prior to the introduction of Horizon, it was easy to do this
since the paper dockets retained to evidence each transaction provided this information. It is
regrettable that the Horizon system does not provide the same functionality as the previous
manual system.
Data that was at first available, but after 42 days (later extended to 60 days) is no longer
available
The main concern expressed about data availability is the need to go back to a previous period
in the event that Transaction Corrections are issued by Post Office a long time after the
transaction to which the TC relates was erroneously input into, or omitted from, Horizon. If the
delay in issuing the TC exceeds 42 days (now 60 days), the Subpostmaster has little choice other
than to accept the TC. Requests for supporting evidence that would enable the substance of
the TC to be validated were routinely rejected by Post Office, usually on cost grounds. Also, the
difficulty in both printing out and examining Horizon's 8cm wide 'till rolls' was a significant issue
in locating the transaction(s) that had created discrepancies.
Data that isn’t available after suspension
Applicants have reported that their ability to investigate transactional discrepancies, or to
defend themselves against allegations made by Post Office, were often thwarted because,
following their suspension (usually on the day of an Audit), they were thereafter denied access
to the Branch. In many instances Post Office Investigators also removed Branch's records, often
including personal documents such as diaries in which they had noted problems that had
occurred; to whom they had reported those problems; what advice and instructions they had
received; and what had resulted from following that advice or instructions. Applicants have
also reported that, despite their requests, they never regained access to any of the records they
needed to prove their innocence.
9. Transactions not entered by the Subpostmaster or their staff
9.1.
9.2.
Many Applicants have reported that Horizon transactions have been entered, or cash or stock
balances changed, when the branch was closed and no one had access to any of the Horizon
terminals. Evidence has also been provided of transactions apparently occurring after a
Subpostmaster was suspended and had no access to the branch's Horizon terminals. Enquiries
on these matters are continuing.
Post Office has confirmed its understanding that it is not, and never has been, possible for
anyone to access Branch data and amend live transactional, cash or stock data without the
knowledge of the Subpostmaster or their staff. However, we are aware that certain error
recovery and correction processes can result in transaction reversals that carry the System
Identities (IDs) of the branch employee who entered the originating transaction that the system
itself is automatically reversing (see ‘Automatic Transaction Reversals’). Enquiries on these
matters are continuing.
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10. Automatic Transaction Reversals
10.1. As mentioned above, a number of Applicants have reported transactions that appear to
have been input when the branch was shut and no one had access to the Horizon terminals.
10.2. Also, in some instances, ‘ghost’ transactions appear to have contributed to shortfalls for
which the relevant Subpostmaster was later held accountable. 'Ghost' transactions are genuine
transactions that for some reason appear multiple times in the Horizon records. We briefly
dealt with this issue in our Interim Report (see Spot Review 01). In that example, the Horizon
system had automatically reversed a transaction, which had been only partially completed.
Although the Subpostmaster had entered the original transaction, he had not entered the
reversal of that transaction. Rather, the Horizon system had automatically generated a
transactional reversal after suffering a telecommunications interruption.
10.3. The transaction identity assigned by Horizon to that reversal was that of the Subpostmaster,
rather than a system-generated ID. We note that this appears to fail to differentiate between
entries genuinely made by a User and those that are system generated. We regard this as a
systems design error.
10.4. This misuse of User IDs for system generated transaction reversals appears to be
inconsistent and not yet fully understood. Various assurances and evidence have been
provided by Post Office and further enquiries are continuing.
10.5. This matter was also highlighted in a report by Helen Rose, Post Office Security - Fraud
Analyst - dated 12 June, 2013:
"... itis just that I don't think that some of the system based correction and adjustment
transactions are clear to us on either credence or ARQ logs."...
"However, my concerns are that we cannot clearly see what has happened on the data
available to us and this in itself may be misinterpreted when giving evidence and using the
same data for prosecutions.
N.B. 'Credence' is a Post Office Management Information Reporting System and 'ARQ logs' is
a reference to a request for Horizon information archived through the ‘Audit Retrieval
Query' process.
11. Cash and Stock Remittances ('Rems') in and out of the branch
11.1. Anumber of Applicants have raised issues concerning 'Rems'.
11.2. 'Rems' are inward and outward remittances of stock or cash (including foreign currency).
Large amounts of cash and stock are routinely sent to and from branches using this process.
Robust procedures are in place to ensure that the process normally operates reliably and that
errors, or theft, are rapidly detected.
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11.3. Occasionally however, branches will report that a Rem 'pouch' was not received or that it
contained fewer items, or lower value, than the sender claimed. Similarly, Post Office will
sometimes find that a Rem pouch sent by a branch is missing or its content has been overstated
by the branch. Post Office deals with these discrepancies by issuing Transaction Corrections
that show the details of the shortfall or overage. Because such discrepancies relate to physical
items, it is necessary to rely on witness statements and other documentary evidence as to the
exact content of Rem pouches.
11.4. Some Applicants have described instances of foreign currency shipments being accidentally
sent to the wrong branch. We are aware that some of these errors have occurred due to Post
Office's Business Partner for Foreign Currency (‘First Rate') using an incorrect delivery address.
Clearly, this introduces the possibility that a Subpostmaster would be held accountable for a
shipment that was never received by his branch.
12. Missing Cheques
12.1. As with outward Remittances (see Cash and Stock Remittances ('Rems’) in and out of the
branch above) sub-postoffices 'Rem' to Post Office's main processing centre (in Chesterfield) all
cheques that the branch has taken in each day. These are put together into 'Stripey' envelopes
and collected by the Royal Mail after each day's cut-off time.
12.2. For almost all of the many cheques that Post Office handles each day, everything normally
goes smoothly, but some cheques do get lost or accidentally spoiled either within the branch or
at Chesterfield, while some envelopes get lost in transit.
12.3. We have also been informed that is possible for cheques to get damaged in Post Office's
cheque processing equipment and therefore not be processed. In such cases, if the cheque is
so badly mutilated as to be unreadable, the possibility arises that a branch might be charged,
through the TC process, for a missing payment even though the cheque had been sent to
Chesterfield. Also, where a customer's cheque ‘bounces’, it will be charged back to the branch
if the branch staff failed to follow standard operating procedure. Post Office will attempt,
where possible, to obtain a replacement cheque from the customer.
12.4. Assertions have been made by some Applicants that customers' cheques (received in
exchange for goods or services rendered at the counter) never cleared and they were held
accountable for the value of those missing cheques. Post Office has told us that there have
been no examples of this occurring and, in due course, Post Office will have an opportunity to
respond to several specific examples cited by Applicants. Enquiries on this matter are
continuing
12.5. Some Applicants have complained that the TC process was sometimes so slow (in regard to
cheques) that, by the time they had been advised that a cheque had been lost, mutilated or
returned by the paying bank, all chances of mitigating their loss were gone.
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13. Pensions and Allowances
13.1. A small number of Applicants have reported problems with Pensions and Allowances. Some
of these cases include allegations that the Subpostmaster fraudulently manipulated pension
and/or allowance payments, for example by showing amounts as having been paid out when
they were not (‘overclaims’) or by allowing a green GIRO cheque to be re-used
(‘reintroductions').
13.2. Several of these Applicants were accused by Post Office of fraudulently processing
overclaims and/or reintroductions and we have asked Post Office to help us gain a deeper
understanding of the cases that were investigated, and the subset of those that were
prosecuted, in order to find out why so few of those cases seem to have resulted in convictions.
We will only be able to develop a properly evidenced view on this subject when we have
examined more of the relevant cases. Enquiries on these matters are continuing.
14. Post Office's Data Retention Policy
14.1. We have been told that Post Office has a seven year Data Retention Policy. This Policy
applies not to only Horizon transactional data (held by Fujitsu) but also to all other business
records including emails, letters, memos, interview recordings and transcripts, Audit and
Investigation Reports and Legal Files on cases that have been concluded.
14.2. I Unfortunately it appears that this Policy is often rigidly applied and, until recently, Post
Office did not appear to operate a ‘litigation hold’ facility whereby documents that may be
needed to support a complaint or investigation were preserved — irrespective of the seven year
retention period. We are aware of cases where it can be shown that the Applicant has
repeatedly, during the intervening years, sought Post Office's help in establishing relevant facts
and yet where the records were routinely deleted due to the inappropriate use of this rigid
policy.
14.3. In these cases Post Office has typically stated that "the time periods of these complaints are
now outside normal document retention periods. There is therefore very limited information
now available."
15. Surpluses
15.1. As stated in the section above dealing with The Standard Contract between Post Office and
its Subpostmasters:
“surpluses may be withdrawn provided that any subsequent charge up to the amount
withdrawn is made good immediately".
15.2. The issue here is that although Post Office defines both shortages and surpluses as
discrepancies, it does not seem to regard surpluses as worth the same degree of attention as
shortages and ignores the possibility that they may be caused by the system itself, or by errors
occurring outside of the branch.
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15.3. We believe that surpluses, just like deficits (shortfalls) are discrepancies, and also that all
discrepancies, if material, should be investigated and corrected. It is only by doing this that the
underlying root cause of the discrepancy can be established.
15.4. The preliminary investigative assumption adopted by Post Office appears to be that:
a) discrepancies are usually caused by problems at the counter; and
b) the Horizon system is blameless.
15.5. This is despite the fact that a surplus of £1,000 is more likely to have a system fault as its
cause, than a £1,000 shortfall. The logic here is that whereas theft and errors as a result of
customers being under-charged, are prime causes of material shortages, it is far less likely that
material surpluses are the result of staff putting money into the till, or of customers paying over
too much cash.
15.6. We are surprised that Post Office has implemented a policy whereby surpluses are retained
(by the Subpostmaster), rather than being recorded by Post Office centrally and held in
suspense so that future shortages and Transaction Corrections could be offset against them.
15.7. We are not aware of any other Financial Institutions that allows staff to keep their till
overages. It seems to us that this is a fundamentally wrong and dangerous practice, not least
because, in encouraging Subpostmasters to remove any surpluses that occur, it avoids focussing
on the event that has caused the surplus in the first place.
15.8. Just as seriously, honest Subpostmasters who have had a large surplus and have legitimately
removed money from the business could later find themselves financially embarrassed when a
Transaction Correction arrives and they now have no readily available funds to cover it.
15.9. This approach to discrepancies is perhaps unique to Post Office's Business Model and we
note that few commercial entities could survive this sort of failure to investigate and correct
discrepancies. Put simply, unlike ordinary commercial entities, Post Office has had little
commercial incentive to seek the root causes of discrepancies because it never has to bear the
cost of them. Instead, the burden of cost (and risk) is being carried either by its Subpostmasters,
in the case of shortfalls, or its customers or Post Office Clients, in the case of surpluses.
15.10. We have also been told that many Applicants were unable to determine the root causes of
discrepancies (both shortfalls and surpluses) reported by Horizon, because the underlying
transaction data was not made available to them.
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16. Cash withdrawals accidentally processed as deposits and other counter-errors that benefit
customers at the expense of the Subpostmaster
Cash withdrawals accidentally processed as deposits
16.1. I Mistakes can occur if the counter clerk accidentally touches the 'DEPOSIT' icon on the screen
instead of the adjacent 'WITHDRAWAL' one thus generating a deficit of twice the size of the
customer's withdrawal. Such errors can be difficult to isolate from the system-produced totals
of card transactions (see Limitations in the Transactional ‘Audit Trail' above) unless the
customer notices his windfall and then tells the branch about it. Absent such customer honesty
and diligence, shortages brought about by such mistakes are very difficult to isolate and
recover.
Other counter errors that benefit customers at the expense of the Subpostmaster
16.2. We are aware of cases where Subpostmasters have been held accountable for shortages
that have arisen through what Post Office refers to as “errors made at the counter" and where
customers have profited at the expense of the Subpostmaster.
16.3. Where a customer has received cash or goods and later discovered that their bank account
has not been debited or their card account has not been charged, it is quite possible that they
may keep quiet about it, leaving the Subpostmaster to be held accountable for the resultant
shortfall.
16.4. The difficulty in resolving such errors is demonstrated by the following description of the
changes in the processing of Giro transactions:
16.5. In mid-2008 the method of processing receipts into Giro Bank accounts was changed.
Previously, customers completed a two-part paying-in slip. One copy of the paying-in slip was
retained by the customer, another was retained in the branch and cross-referenced to the entry
made on Horizon. If, for example, the counter clerk accidentally keyed in £2,000 instead of
£200 and did not spot that error immediately then, when the next balance was carried out,
Horizon would have reported that there should be £2,000 cash in the safe whereas in fact there
was only £200 in it (i.e. there would be a £1,800 cash shortfall).
16.6. Prior to the mid-2008 processing change, the Subpostmaster would have been able to
identify that £2,000 cash had been entered onto the system relating to a customer whom, by
cross-checking with the paying-in slip, in fact had only paid in £200. Hence, a correction could
have been actioned and the branch's books brought back into balance. In such a case, the
apparent cash shortage would have been eliminated because the audit trail enabled the specific
cause of the shortage to be identified and corrected.
16.7. However, after the processing change, paying monies into Giro Bank accounts was actioned
via swipe cards and one-part paying in books with no supporting documentation being retained
in branch.
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16.8. After that processing change, the counter clerk would swipe the customer's card to access
the account details and then key in the cash deposit. After inputting the deposit, the system
printed out just one copy of a receipt (which specifically states on it "NOT TO BE RETAINED")
and this was then passed back to the customer along with their swipe card.
16.9. It follows that, if the counter clerk had accidentally input £2,000 instead of £200 into
Horizon and did not immediately spot the error, the balance would show an £1,800 difference
between the cash holdings on Horizon and the actual cash holdings (as in the previous
example). However, after the processing change, there would be no supporting documentation
available either to the Subpostmaster, or to Post Office centrally. Therefore neither the
Subpostmaster nor the Post Office's central processing unit would be able to check whether or
not the cash deposit entries on the system reflected the actual amount of cash that had been
deposited.
16.10. The lack of an audit trail is a fundamental flaw in any accounting system and the revised
process made it almost impossible to identify processing errors and action corrections.
17. Error and fraud repellency
17.1. Normally, when a business detects errors or fraud occurring repeatedly, investigative and
analytical work will be carried out to determine whether changes to its standard operating
procedures, to its hardware or software, or to its employee training, should be made so as to
reduce the likelihood and/or seriousness of future recurrence. This process of investigation and
analysis generates, over time, a 'Virtuous Circle’ of detection, loss mitigation and process
correction/improvement which builds the entire system's robustness and efficiency.
17.2. Businesses are motivated to carry out such improvements when the projected Return on
Investment shows that the savings (loss reductions) that will accrue from implementing those
improvements will be well in excess of their initial and ongoing cost. If it seems that the cost of
reducing those losses will exceed the likely return by way of reducing them, the company may,
quite appropriately, take a risk-acceptance decision to continue to absorb the losses. The skill,
in Loss Management, is in establishing where losses can be minimised at the lowest possible
cost.
17.3. With the exception of Lottery and Scratch Card processing, we have found little evidence
that Post Office has utilised the above-mentioned investigation-led improvement process. In
not taking responsibility for "errors made at the counter", even where it is obvious that some of
those errors have been systematically repeated in a branch, or even across the Network, Post
Office seems not to taken 'ownership' of finding ways to reduce (or manage) those errors. This
is unsurprising in that the cost of those errors or fraud is, in Post Office's Business Model,
generally borne by its franchisees, the Subpostmasters, rather than by Post Office itself (see
also The Contract between Post Office and Subpostmasters above).
17.4. This has led to a situation where Subpostmasters have been bearing the cost of losses
caused by errors and fraud that could have been designed out of the system, while Post Office
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has benefitted from the savings it has made by not implementing the improvements that would
have reduced them. Since it was not Post Office that would save money by developing more
error and fraud-repellent processes, the above-mentioned motivation, that is present in most
businesses, has been absent.
17.5. The following key question, that arises from the above observations, is:
"Is Horizon fit for purpose?"
17.6. In answering this question, we recognise that, in the vast majority of cases, Post Office's
Subpostmasters operate their branches year after year with minimal reported problems. For
them, the Horizon system appears to be "fit for purpose".
17.7. References here to 'the Horizon system' are mainly focussed on ‘Horizon On Line’, which
evolved from the original Horizon application. Our comments encompass not only the system
itself but also supporting processes and procedures. However, a number of comments received
relate to earlier versions of the system, a number of enhancements having been made following
user experience and feedback.
17.8. For the Horizon system to be considered ‘fit for purpose’, it would need to accurately record
and process, with a high degree of error repellency, the full range of products and services
offered by Post Office, whilst providing a clear transaction audit trail that would allow easy
investigation of any problems and errors that arose.
17.9. The cases that we have reviewed demonstrate that this design objective has not always
been achieved.
17.10. The system would also need to be able to cope with a diverse collection of end users and
operate in areas where power and telecommunications reliability could not be taken for
granted.
17.11. Again, the cases that we have reviewed show us that errors are more likely to occur when
unusual sets of circumstances and behaviour are present. We have little doubt that branches
with unreliable hardware, telecommunication and poor power supplies appear to have suffered
a disproportionate incidence of problems, some of which became, in effect, life-changing.
17.12. We have also come to the conclusion that some people were probably unsuited, from the
outset, to the ever-increasing complexity of running a computerised branch. These include
those who:
a) were relatively (or even in some cases totally) new to using a computer;
b) _ had insufficient time and knowledge to be able to investigate and resolve shortages;
c) _ relied upon staff whom they may have ‘inherited’ from the prior Subpostmaster and
who were either careless, inadequately trained or even dishonest; and
d) had insufficient capital to be able to afford to pay in, in some cases overnight, the large
sums that from time to time appeared as (perhaps transient) shortage.
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17.13. Where a person, who was either unsuitable or inexperienced, was faced with problems,
perhaps associated with hardware or telecommunications failures and the system's resultant
restart and recovery procedures, it was at that moment that an otherwise repairable situation
often turned into a catastrophe. For them, and in those very specific circumstances, Horizon
could not be described as "fit for purpose".
18. Giro transactions
18.1. An issue has been raised by Applicants in regard to Giro transactions. This relates to Horizon
operating in Recovery Mode, for example following power or telecommunications failures that
resulted in the branch terminals freezing. In these situations it goes through a complete system
reboot, then, when the system has finally rebooted, a message appears on screen asking "do
you need to recover any Giro transactions?".
18.2. When Subpostmasters are faced with this question they usually will not have sufficient
information to know whether or not the system needs to recover any Giro transactions. If a
Subpostmaster responds in the affirmative, the system asks for the details of the Giro
transactions that need to be recovered. As the Subpostmaster does not have the relevant
details to hand (and cannot access the data as Horizon is still completing the re-boot process),
the Subpostmaster is forced into responding in the negative and hoping that is the correct
response. This will often result in the ‘wrong’ answer being entered and transaction errors
being generated.
19. One-sided transactions
19.1. Many Applicants have raised concerns regarding transactions involving debit or credit cards
where Horizon has processed a transaction but the corresponding charge to the customer's
bank account was not processed. In other cases the opposite situation occurred, where Horizon
rejected (or appeared to have rejected) a transaction, but the corresponding charge to the
customer's bank account was processed.
19.2. One possible cause for this might be that telecommunications failures, such as those that
disconnect the PINpad (as reported by many Applicants) have occasionally prevented one side
of a transaction being processed whereas the other side of it has been processed properly.
These sort of processing interrupts might result in customers being charged for goods that they
have not received (for example deposits that don't get processed or bills that don't get paid) or
customers receiving goods (or cash) for which they have not been charged.
19.3. These transaction processing failures would be less troublesome if they were always
detected, at the counter ideally, or later by additional control and reconciliation processes
carried out by the Subpostmaster or by Post Office itself.
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19.4. It is however not yet clear whether Post Office's in-house (after-the-event) reconciliation
processes can be relied upon to always detect any one-sided transaction that the
Subpostmaster fails to detect.
19.5. Where a customer has been charged for something that he has not received, there is a very
high likelihood that he will detect this (for example if he receives a Final Demand for a bill that
he has paid) and will complain. On the other hand, where the opposite has happened, and a
customer has received cash, or goods, and his bank account has not been debited or his card
account has not been charged, it is perfectly likely that he will be unaware of his windfall or will
simply keep quiet about it, leaving the Subpostmaster to be held accountable for the resultant
shortfall.
19.6. It is important to understand that, where that sort of Horizon-generated error occurs, no
evidence of it is visible to the Subpostmaster unless the customer discloses it.
19.7. We have provided Post Office with examples of these one-sided transactions and our
enquiries on this important point are continuing.
20. Hardware issues
20.1. An examination of the hardware in use in a typical branch reveals that the equipment
appears to be quite old, often ten years or more since being first put into use. This is because
much of the bespoke equipment used by Horizon is no longer manufactured.
20.2. There also seems to be little routine hardware maintenance. Instead, faulty equipment is
replaced as and when needed. This process is referred to as "kit swap outs" and principally
involves the replacement of broken units with reconditioned ones. Reports of several
reconditioned components or units being tried, and failing, before a working one is found, are
not unusual. The most commonly raised issues concern printers, PINpads, touch screens,
telecommunications equipment and base units.
20.3. Many Applicants believe that faulty equipment could be responsible for otherwise
unidentified shortages. Enquiries on this point are continuing.
20.4. We have also been told of cases where printers may have sent messages to the main
Horizon system, reporting that postage labels have been printed, when they have either not
been printed, or have been spoiled in such a way that the Subpostmaster was unable to claim
the money back from Post Office. In regard to PINpads, the concern is that failures in those
could result in partially-processed transactions (see One-sided transactions above), whereas
the principal concern in respect of touch screens is that they sometimes go out of alignment,
such that touching one icon can result in the execution of steps that are meant to be invoked by
an adjacent icon or the accidental mis-keying of values that are ten times greater or less than
the intended amount (see Cash withdrawals accidentally processed as deposits and Other
counter errors that benefit customers at the expense of the Subpostmaster above).
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21. Post Office Audit Procedures
21.1. We have come across many cases where Subpostmasters have told us that they were not
given copies of the Audit Reports relating to their branches and that their enquiries to Post
Office in respect of that Audit were never answered.
21.2. It is clear that Post Office's current practice is that each Subpostmaster is provided with a
copy of the Audit Report for his branch. We do not know when this current practice was
adopted or whether a similar policy applied prior to 2013.
22. Post Office Investigations
22.1. As aresult of our investigations we have established that Post Office's investigation team
has, in many cases, failed to identify the underlying root cause of shortfalls prior to initiating
civil recovery action or criminal proceedings. This includes cases where Subpostmasters
brought to the Auditors’ or Investigators' attention their own suspicions as to the underlying
root causes.
22.2. I Many Applicants, and almost all the Professional Advisors, believe that there was
inadequate investigation prior to suspension (without pay); termination; or civil/criminal action.
22.3. When conducting an investigation, Post Office's investigators seem to default to seeking
evidence that will support a charge of False Accounting — rather than an open minded
investigation into the root cause of any suspected problems. This evidence is often easily
obtained since when confronted, during interview, with evidence of obviously over-stated cash
figures, the accused person will often readily admit to several counts of falsifying the end of
Trading Period Accounts.
22.4. These interviews will usually be recorded and, when an admission has been made, this will
virtually always trigger a ‘Guilty’ plea by the defendant. As a result, Post Office investigators
have found that, by recording these admissions of False Accounting, this was the key to
achieving relatively rapid, and (to Post Office) inexpensive, asset recovery.
22.5. As aconsequence of this, Post Office's investigators seem to have de-emphasized the
importance of unearthing the true root causes of the "mysterious shortfalls" that Applicants
claimed to have suffered. Even when faced with requests from Subpostmasters for
investigative help, this has often been refused. Regrettably, this refusal to provide investigative
support is in line with the Standard Contract (see The Standard Contract between Post Office
and its Subpostmasters above) but is clearly contrary to Subpostmasters' expectations.
22.6. Post Office's instructions to (and training of) its Investigators seems to have disregarded the
possibility that the Horizon system could be in any way relevant to their investigations. A
consequence of this flawed approach to investigations is that many opportunities for process
improvements have been missed.
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