POL00088579
POL00088579
LICY DOCUMENT - Postmasters’ In Service Debt Policy
A
Reference information
Policy type Postmasters’ Lifecycle Issue
Ref
Date 08/02/2019
Status Draft
Version no. _I Version 1.2 Draft
Author John Breeden
Owner Agents’ Contracts and Policy Development Manager
Review Date
Key Contracts Team:
stakeholders I John Breeden
Keith Bridges
Andrew Carpenter
Carol Ballan
Finance Service Centre:
Alison Bolsover
Dawn Wall
Dawn Phillips
Agents Development and Remuneration Team
Nick Beal
Approval
Role Name(s) Date
Assurance Pauttnweed; Centracts-and Pelicy Manager 04/42/2044
Authorised Paul Inwood, Contracts-and Pelicy Manager 04/42/2014
Version control
Version No. Reason for issue Date
Version 1.0 Policy review to assess the relevance and fitness for 18 September 2013
purpose of existing POL contractual policies and
processes for all Post Office branch models.
Version 1.1 I Amendment to version 1.0, Section 12.0 referring to the I 22 October 2013
write off authority levels for Network Services.
Version 2.0 Version following post implementation review of version I 4 December 2014
1.1.
Version 1.0 I Proposed amendments to policy following a review of 15" January 2018
Draft the debt recovery/concurrent process operating between
Finance Service Centre and Contract teams.
Version 1.1 Final draft document. 13" August 2018
Version 1.2 _I Revised final draft document 8" February 2019
CONTENTS
PART 1
1.0 Statement
2.0 Glossary
3.0 Introduction and purpose
4.0 Background
5.0 Right of recovery of sums due
6.0 Repayment of outstanding debt
7.0 Pluralist Postmasters and multiple partners
8.0 Death in service
9.0 Risk Register / Branch Profile
10.0 Securing the debt
11.0 Write offs
12.0 Debt disputes - Transactional debt
13.0 Debt disputes - Non-transactional debt
14.0 Appendicas
SUBJECT: Policy for dealing with the recovery of Postmaster’s in service debt
PART 1
1.0 Statement.
1.1 The purpose of this policy is to clearly set out the policy Post Office Ltd (POL) will follow to
recover debt incurred in service by Postmasters of all Post Office branches. This policy
supercedes custom and practice formerly implemented to recover debt incurred in service.
2.0 Glossary
Word/term Definition
Assistant A person employed by the Postmaster (who is approved by Post
Office Ltd) to work in the Branch
Basic Business
The type of business carried on by the Postmaster on its own
account from the Branch Premises
Branch
The Post Office branch operated by the Postmaster
Branch Discrepancy
When Branch Trading is completed, Horizon calculates the
expected cash position, using the transactions completed
through Horizon. The branch then counts the actual cash in
the branch and declares this. A branch discrepancy is where
there is a difference between these two values, either a cash
shortage or surplus.
Branch Premises
The premises from which the Post Office Branch and the Basic
Business are operated
Branch Trading
The act of the monthly balancing of the branch accounts. The
Postmaster is required to reconcile the cash and stock in the
branch against what the Horizon system is displaying there
should exist in real terms.
DFR Deduction from fees/remuneration
Existing Contract A contract currently in place between Post Office Ltd and the
Postmaster (or, as appropriate, a shareholder and/or a director of
the Postmaster) for the operation of a Post Office branch at the
Branch Premises
FSC Finance Service Centre
NBSC Network Business Support Centre
Non-transactional Debt
Refers to debt incurred outside of branch transactions,
incurred due to unpaid invoices for example: Franchise
Insurance Waivers (once a year); oF F
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NT Agreement Contractual conditions for the operation of a Local Post Office®
and Main Post Office®. This also includes the Temporary
Subpostmasters versions.
Operator Refers to an individual, company or partnership responsible
for the operation of a Local or Main branch under an NT
Agreement only
Postmaster This is the collective term for an individual, company or
partnership contracting with POL as an Operator, Subpostmaster
or Franchisee.
POL Post Office Limited
Settle Centrally In Horizon Postmasters can choose the option to “Accept and
Settle Centrally” which signifies acceptance of a loss or gain
within a branch unless the dispute process is instigated.
“Settle Centrally” does not prohibit further investigation which
might offset all or part of the loss/ gain accepted earlier, but
this is the branch’s responsibility to initiate.
Subpostmaster/ Refers to an individual, company or partnership responsible
Franchisee for the operation of a Post Office branch under a Traditional
Contract
Traditional Contract Contract for the operation of Post Office branches, signed prior to
the introduction of Local and Main agreements. Traditional
contracts include:
Subpostmasters Contract; Community Subpostmasters Contract;
Modified Subpostmasters Contract; Franchise Agreement;
Franchise Independent Retailer Agreement; Satellite contract;
Outreach Agreements; Company Operated Contract; Local
Funded; Paystation Direct Settlement; PO Essential; Temporary
Subpostmasters Contract
Transaction Correction I Transaction Corrections are sent to the branches via their
Horizon system when a discrepancy has occurred in their
accounting or where a branch i is considered liable for PVCS
processing failures SHER
€urreney. These are sent out by teams within Finance Service
Centre who deal with various clients/products.
Transactional Debt Refers to debt incurred in branch created by a Transaction
Correction or a Branch Discrepancy which has occurred in the
office accounts at branch trading.
3.0 Ini ‘ion an rl
3.1 In order for POL to be modernised and sustainable it is vital that it works to prevent and
minimise financial loss, and mitigate the impact of financial loss on POL and the network.
Aside from the direct cost to POL of incurring losses, some of which are ultimately written
off, all losses involve administrative costs in dealing with recovering the debt and with
the errors that cause them.
3.2 This policy is designed to provide clear and consistent guidelines for POL to recover
transactional and non-transactional debt incurred whilst in service by Postmasters of all
Post Office branches still in post.
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4.0 Background
4.1 From a purely contractual perspective the Postmaster of a Post Office branch is
responsible for:
« Making good any loss of Post Office cash and stock without delay.
« Making good any losses incurred whilst operating under their respective contractual
agreements that come to light following termination of the agreement.
e All losses incurred through their own negligence, carelessness or error and also for
losses caused by their Assistants.
e Invoices to be settled in line with agreed payment terms on the invoice.
4.2 To ensure that this policy is consistent with the contractual relationships between POL
and the Postmasters it is designed to clarify circumstances where mitigation may be
appropriate and to provide a clear framework of repayment options, where immediate
repayment is not possible.
5.0 Right of recovery of sums due
Traditional contracts
5.1 POL has a common law right to set off sums owed by the Subpostmaster/Franchisee to
POL against some payments made by POL to the Subpostmaster/Franchisee.
NT Agreements
5.2 Where money is owed by an Operator to POL whether that money is owed under an
Existing Contract or lease of premises or otherwise, POL at its own discretion may
recover all of that money from any sum due to the Operator under the NT Agreement or
the Existing Contract, including their remuneration fees or any termination payment
owing to Operators leaving the Post Office network. This right does not affect POL’s right
to require an Operator to make good any deficiencies identified through the late account
procedure and/or repay any other debts due. (Also note that POL has made a
business decision that sums owed by the Operator cannot be recovered from
funds POL released to the Operator under the Network Transformation
Programme namely investment payments, or conversion or transition
payments.)
6.0 Repayment of outstanding debt
6.1 The contractual position is that Postmasters should repay the debt immediately. POL
understands that in some circumstances immediate repayment of the debt is not always
possible. It is within POL’s interests to ensure the continuation of Post Office services
and branches, by motivating Postmasters to repay debt whilst continuing service, and
where appropriate limiting the risk of resignation or notice of termination by a Postmaster
whilst taking steps to recover the debt.
6.2 Therefore there will be circumstances in which POL will give due consideration to offering
one or both of the following repayment options to Postmasters:
e Repayment of full amount in one instalment.
« Repayment plan where Postmaster proposes a reasonable repayment plan
e Repayment by part lump sum and part reasonable repayment plan.
Each repayment option is considered in turn below.
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6.3 Repayment of full amount in one instalment
6.3.1 The default option for repayment of debt should be in full either via direct payment or by
deducting the amount from fees/remuneration. Note that the priority order for payment
options is to be defined as card payment, automatic transfer (bacs or chaps payment),
one deduction from remuneration, with the last option being payment via cheque.
6.4 Postmaster proposes a reasonable monthly repayment plan
6.4.1 Postmasters will not always be able to repay the debt in one payment. POL will consider
reasonable repayment plans suggested by Postmasters. Repayment plans should be
funded by deductions from fees/remuneration, however direct payments will also be
accepted.
6.4.2The maximum amount that can be deducted each month is 25% of the
fees/remuneration unless the Postmaster voluntarily offers to pay more.
6.4.3 The normal duration over which a repayment plan should be arranged is 12 months.
6.4.4 In circumstances where a 25% deduction from fees/remuneration would be insufficient to
repay the debt over 12 months and lump sum payment should be requested.
6.4.5 If a lump sum payment cannot be made an extension of the plan beyond 12 months can
be agreed.
6.4.6 Decision levels in respect of repayment plans are:-
Up to 12 months duration - FSC Duty
Between 12 and 24 months - FSC team leader
Between 24 and 48 months - Senior Debt Recovery Manager, FSC
Over 48 months - Senior Debt Recovery Manager and Head of Agency Contracts
Deployment
6.4.7 The agreed repayment is to be confirmed to the Postmaster in writing detailing the
amount of debt and the amounts to be repaid each month. Example letters are Shown in:
appendix’1, (The letter should also expressly reserve all of POL’s rights and remedies
under the contract.)
6.4.8 Only one repayment plan should be in place at any time, requests to add to a current
repayment plan will be considered.
6.4.9 Proposals to repay beyond 48 months should only be agreed in exceptional circumstances
by the Senior Debt Recovery Manager, FSC and Head of Agency Contracts Deployment,
with a brief rationale being placed on file.
6.5 Repayment of debt following an incident or at reinstatement on a conduct case.
6.5.1 the approach to be adopted should the same as for transaction debt ie repayment in
full by one instalment however where this is not possible a part lump sum payment and
repayment plan can be used and if this is not possible a repayment plan for the full amount
outstanding.
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6.5.2 Decision levels in respect of repayment plans are:-
- Up to 12 months duration - Contract Advisor
- Between 12 and 24 months - Contract Advisor and their Line Manager
- Over 24 months - Senior Debt Recovery Manager, FSC and Head of Agency
Contracts Deployment
7 Pluralist Postmasters and multiple partners
7.1In the case of pluralist Postmasters and multiple partners, POL will consider the
aggregated remuneration of all of the pluralist’s or multiple partners’ branches as
opposed to the individual position of the site where the loss has occurred.
8 Death in service
8.1
9
The recovery of debt from a Postmaster who has died in service will be dealt with by
the Former Agents Debt team. It is important to note that each case must be treated
with sensitivity and due diligence. Where POL has contracted with a company, as
opposed to an individual, the branch may be able to continue operating. In such an
instance POL will continue to deploy its business as usual policy.
Risk register/Branch profile
9.1 The Agents Debt team will refer cases where the debt exceeds one year's
fees/remuneration to the Branch Analysis Team.
9.2 Persistent offenders ie where a Postmaster regularly requests repayment plans will be
10
10.
10.
10.3
11
referred to the Branch Analysis team.
Securing the debt
1. There may be circumstances where POL wants extra comfort that it can recover losses
incurred by securing the debt, particularly where there are concerns about the
Postmaster’s accounts or where there is the risk that the Postmaster may leave the
network. POL loses significant amounts of money to former Postmasters.
2 The debt may be secured in two ways:
a. Guarantees (proactive) - under the Local and Mains Post Office agreements
Operators operating as a company are obliged to provide guarantees to secure the
performance of the Operator’s obligations under the agreement, where the company
has existed for less than three years, or if the company is deemed a financial risk. It
is important that POL explains clearly to the guarantor that they will be liable for the
debt. The Guarantees in Company to Company relationships policy should be
referred.
b. Charges on property (reactive) - POL may consider securing the debt against
property of the Postmaster by placing a charge on their property. This measure should
not be implemented without informed advice from Legal Services.
The Postmaster should obtain independent legal advice before providing a
Guarantee or a Charge. POL should obtain an Independent Legal Advice (“ILA”) certificate
confirming this. This will minimise the risk of the Guarantee or Charge being set aside.
Write off:
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11. Decisions in respect of write-offs are not taken by groups but are the
responsibility of individual managers, who bear P&L accountability for those decisions.
The reasons for a ff must be fully documented and may be subject to audit. The’
write off process at appendix 2.
11.2 Finance and Operations Directorate may write off against it cost centre, in which
case the following authorisation levels apply:
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Agents Contracts Deployment Manager (Head
Up to £5,000 of Operations Support)
Up to £25,000 Head of Agency Contracts Deployment (Head
of Network Operations)
Up to £250,000 Network Operations Director
£250,001+ Chief Financial Officer
(If the debt is to written off by the Field teams the authority lies with the job roles shown in
brackets.)
11.3 Alternatively, FSC may write off debts against its cost centre , in which case the
authorisation limits below will apply:
Up to £1,000 Team Leader, FSC
Up to £25,000 Senior Debt Recovery Manager, FSC
Wey
Up to £250,000
Network Operations Director
£250,001+ Chief Financial Officer
12 Debt disputes -Transactional debt
12.1 POL acknowledges the potential financial impact and stress that may be caused
by unexpected Transaction Corrections or Branch Discrepancies. An effective dispute
resolution process is essential to ensure that settled centrally debts are not recovered
from Postmasters without reasonable time to investigate, challenge and resolve individual
amounts.
12.2 There are two routes by which Postmasters might instigate the dispute process:
* Transaction Corrections
e Branch Discrepancies
(Details are shown in Appendix 3)
12.3 The decision of the manager allocated to investigate the dispute will be final.-
13. «De Di: - Non-tran: ‘ional
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13.1 Where the Postmaster disputes the amount of an invoice he should raise a query
using the email address. The Agents
Accounting Team will then forward on the query to the responsible individual within
POL who raised the invoice. The responsible individual will respond to the Agents
Accounting Team to confirm the amount and will respond to the postmaster
accordingly. Where the Postmaster has successfully disputed an invoice amount (i.e. he
has been charged incorrectly), the responsible individual will request a credit to be
raised to offset against the invoice.
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1 Deductions letter wes
Deductions Letter
NEW 2018 Template
1 Repayment letter new a &
Repayments Letter
NEW 2018 Template
1 Repayment revised and agreed a ds
Revised Agreed
NEW 2018 Template
1 Repayment revised te
Revised Plan NEW
2018 Template.docx
2 Write Off Process
3 Debt Disputes - Transaction Corrections iS
and Branch Discrepancies iw]
Debt disputes
Extract Draft 08.02.1
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