POLICY DOCUMENT- Postmasters’ in Service Debt
Ve)
aos
Reference information
type Postmasters' Lifecycle Issue
issue 8
Gaig/2014
Active
Version no. Version 2.0
Author Ravi Chauh: nd Policy Advisor
Owner Development Manager
Contracts Team:
John Breeden
Lin Norbury
Andrew Carpenter
Finance Service Centre:
Alison Bolsover
Dawn Wall
Finance:
Mike Hallas (Tax implications)
Carl Nielsen
Security Team
Sally Smith
Legal Services:
Jessica Madron
Approval
Role i dat :
Assurance 04/12/2014
Authorised 04/12/2014
Version control
Version I
Version ss for
purpose of existing POL contractual policies and processes
for all Post Office branch models.
ia.
Version L1 Amendment to version “LO, Section 12.0 referring to the I 22 October 2013
write off authority levels for Network Services.
Version 2.0 I Version fellowing post implementation review of version 4 December 2074
Page 1 of 15
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206 Glossary
introduction and purpose
40 Background
58 eet of recovery of sums due
‘1.0 Applicability
2.0 Related policies
3.5 Implementation procedures
4.0 Standard letters and decuments
1.0 Statement
rcurred in service hy Postrr
custern and practice formerly implemented to recover debt incurred in service.
Worditerm Definition _
Assistant A person em) by the Postmaster (whe is approved by Post Office Ltd) to
“ee work in the Bra
Basic Business The type of business caried on by the Postrnaster on its own
account from the Branch Prernises
Branch I The Post Office branch
ie Postrna
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Branch When Branch Trading is cornpieted, Horizon ce
Discrepancy position, using the transactions completed thro
then counts the actual cash in the branch and declares this. A bra
discrepancy is where there is a difference between these two values,
L either a cash shortage or surplus.
Branch Premises I The premises from which the Post Office Branch and the Basic Business are
operated . .
Branch Trading The act of the monthly balancing of the br: accounts. The Postmaster I
/ I is required to reconcile the cash and stock in his branch against what the
__ Horizon system is displaying there should exist in real terms.
DFR Deduction frorn fees/ rernunerati
Existing Contract
FSC
NBSC
Non-transactional
Debt
unpaid invoices for example: Franchise insurance Waivers (once a year);
Lease of el (once every quarter); Property projects (e.g.
refurbishment work).
NT Agreement Contractual conditions for the operation of a Local Post Office® and Main
_. Post Office®
Operator Refers te an individual, company i
operation of a Local or Main branch under an NT Agree
I Postmaster ‘This is the collective term for an ual, cormpany or partners
L a POL as an Operator, Subpostmaster or Franchisee.
UPOL _ Post Offic ted
I Settle Centrally In Horizon Postmasters can choose the option to “Accept and Settle
Centrally” whic f signifies @ acceptance of al es or gain ithin a b: neh
unless the dis
prohibit furth: ‘ ¢
= <cepted earlier, but this is the branch's responsibility to initiate.
Subpestmaster/ Refers to an individual, company or partnership responsible for the
Franchisee operation of a Post Office branch under a Traditional Contract
Traditional Contract for the operation of Post Office branch ned pri
Contract introduction of Local and Main agreements. Traditional contracts include:
Subpostmasters Contract: Community Subpostrnasters Contract: Modified
Subpestmasters Contract Franchise Agreement Fran dependent
Retailer Agreement: Satellite contract: Outreach Agreements; Company
Operated Contract; Local Funded; Paystation Direct Settlement: PO Essential
Temporary Subpostrnasters Contract,
Transaction
Correction
ansaction Corrections are sent to the bre their Horizon systern I
when a discrepancy has occurred in their accounting or where a branch is
ing failures uch as negligent
A discrepancy may not have arisen in
but a loss has been identified at sorne point wh attributable
fic be anch. These are sent out by tearns within Finance Servi
a
I Transactional R
I Debt mcy which has secured in the office
0 Introduction and purpose
3.4 In order for
to be modemised and su tis vital that it works to prevent and
ninim! loss, and mitigate the impact of financial loss on POL and the network
Aside frorn the direct cast to POL of incurring lasses, same of which are ultimately written
off, all tosses involve adrninistrative costs in dealing with recovering the debt and v
errors that cause them.
ae
RQ
med te provide clear and consistent guidelines a
al and non-transactional ¢ red whist
ce branches whether they are still in service or have subsequently resigned.
This policy is desi
wo
i quidance notes fer dealing with these requests are included in Part 2
3.4 Standard letters (inclusive of those which are sent via Finance S and decurnents are
included in Part 2 (Section 4.0) of this policy.
ual perspective the Postmaster of a Post anch is responsible
e Making good any less of Post Office cash and stock without delay,
« Making good any losses 1 z fist_ operating under her respective contrac
4.2 To ensure thal
the Po
and to pro
possible.
y is consistent the contractual relationships between POL and
gned to clarify circurmsta mitigation may be appropriate
vide a clear framework of repayrnent options, where Immediate repayment is net
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5.0 Right of recovery of sums due
Traditional conti
5.2 POL has a common law right to set off sums d by the Subpostmaster/Franchisee to POL
against some payments made by POL to the Subpostmaster/Franchisee.
NT Agree,
Where mor
us
all of that rnoney from a
ng Contract, including their re
termination payment owing gq the Post Office netwo 5
affect POUs right to r any deficiencies identified through
the late account procedure and/or repay any . Also note that POL has made
a business decision that sums owed by the Operator cannot be recovered from funds POL.
releases to the Operator under the Network Transformation Programme namely
investment payments, or conversion or transition payments.
6.0 Repayment of outstanding debt
the debt immediately. POL
es immediate repayment of the debt is not a’
possible. It is within POL's interests to ensure the continuation of Post Office services and
branches, by motivating Pastmasters to repay debt whilst continuing where
appropriate limiting the risk of resignation or notice of termination by an Postmaster whilst
tal teps to recover the debt.
6.1 The contractual position is that Pi
understands that in sarne circums
g
eration to offering
6.2 Therefore there will be circumstances In which POL. will give due co’
one or both of the following repayrnent options to Pestmasters:
« Repaymerit of full amount in one instalment.
s Repayment plan where Postmaster proposes a reasonable repayment plan up te 12
months.
Each repayrnent option is considered in tur below.
6.3 Repayment of full ameunt in one instalment
6.3.1 The def on for repayment of debt should be in full either via direct payments or by
deducting amounts from fees/remuneration. Note that the priority order for payment
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is to be defined as card payment, autornatic transfer (bacs or chaps payrnent), one
uneration, with ing payment via cheque.
options
eduction from re:
on
i
4. Postmaster proposes a reasonable monthiv repayment plan up te 12 months
L Postmasters will not be able to repay the debt in one ant. POL.
reasonable repayment pl suggested by Postmasters. Postrnasters must pro
for why ¥ are proposing the repe
S
rs
vill consider
ie a reason
in full
y basis over a maximurn peried of
g amounts from fees/remuneration.
be defined as card payment. automatic
t option deduction from
iod (see Fig 1 below). Further note that the
yepayment plan will cornmence from the date of the next remuneration payrnent following
6.4.2 The Postrnaster can propose to repay a d
2 ths either via dir payrnenis or
Note that the p or payrnent optic
transfer (bacs payment) with
insufficient to repay the debt over the
ent period. a lump sum will be required from the Postrnaster to repay the
is must be received prior to the end date of the repayment plan in cleared
6.44 For transactional debt only one instalment pian can be in place at any time. This should be
confirmed in writing to the Operator, using Standard Letter D, when the mitial repayment
plan is established. Following repayment ~ no further instalment plans will be allowed fer a
further 12 month period. Postmaster incurs a further transactional debt i he has
settled centrally, the debt shail be added to any existing instalment plan using Standard
Letter K or I and is payable in one payrnent by the next month. The 12 month period would
‘om the date of the final payrnent being on the previous instalment plan.
n the jent plan was repaid is to be included on the coricurrence
y the Agents mn. Should a Postmaster appear on the report
y ve & repayment pian in he twelve month period after repayment of
a plan, the Contract Advisor should request full repayment. A conversation must be
conducted wi Jperator to assess the finar sith lerns being experienced at
the branch.
g
&
S
3
6.4.5 Where the Postmaster has agreed to repay the debt any repayrnent plan shauld be recorded
, using dard Letter D. The letter will state the agreed sum due, when
instalments are to be paid and for how much. The letter should also expressly reserve ali of
POL's rights and remedies under the contract. POL and the Postmaster should then sign off
the plan as having been agreed. Note that agreement is not required to deduct the arnount
from fees/remuneration where the ster has failed to repay the debt subsequent to
6
oe
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warning from the Contract Advisors (See Process Chart A). In such cases Standar tier E
or F can be used to communicate the arrangement to the Postmaster.
Note that where the Postmaster pragoses a repayment plan of beyond 12 months it is at
the discretion of the Agents Contract Deployment Managers, in consultation with the
respective Contract Advisor, te approve or reiect such a reguest subsequent to assessment
of the circumstances (see Process Chart D). Proposals to repay heyond 12 months should
only be assessed in exceptional circumstances by the Agents Contract Deployment Managers
and Contract Advisors, where a 25% monthly deduction from fees/remuneration does not
settle the debt within a 12 month period and a full analysis of the Pestmaster’s income and
expenditure demonstrates that the repayment of a debt within a 12 month period wou
put the Basic Business and/or Branch at serious risk of forced closure due to the finar
detriment caused by the instalment plan. The instalment shail not exceed 60 months. Pro
forma A shall be sent by the Contract Advisor to the Pastrnaster for completion to enable the
Contract Advisor position of the
fe tmaster. POL can also
a credit check and to provide a copy of the report to
Fig 1 - Deduction from fees/remuneration
Where direct payment is not made by card sayment or automatic transfer {bacs or chaps
payment}, the debt can be paid by deducting amounts from the Postmaster's
fees/remuneration over the agreed repayment period. Where the debt amount exceeds
£1000: 00, the Agents Accounting Team will send out a concurrence report to Contract
ors, seeking concurrence to commence collection of this outstanding debt by deduction
frorn remuneration.
&
fay
ing the amount tc be deducted frorn fees/remuneration (DFR), POL must consider
es/remuneration for the previous
term remaining on the Postmaster's agreement (this is of particular
cordance with his respective
412 months and
avance where a Postmaster has given notice to terminate in a
Agreement).
the
¢. Once the above considerations have been made POL will calculate the level of deduction:
maximum amount that can be deducted each month is 25% of the monthly fees/remuneration,
unless the Postmaster voluntarily offered more.
a@_ Incases where the monthly nstalments would be Insufficient te repay the debt over the agreed
repayrnent period, a lump sum will be required frorn the Postmaster to repay the balance and
this must be received prior to the end date of the repayment plan in cleared funds. Where the
Postmaster is still unable to repay the outstanding balance POL should seek legal advice to
consider the options set out below, at Section 11.0, to secure the debt.
the case involves a pluralist Postmaster the percentage of fees/remuneration deducted is te
be calculated in the aggregated fees/remuneration for all branches operated by the
Postmaster. Similarly if it is a ternporary Postmaster with more than one branch the
percentage would be calculated on the aggregated fees/remuneration for ail branches,
7.0 Repayment options for former Postrasters
fol
meurre!
er Postrnasters for
ing options are available to fo yepayment of debt
service:
co 8
Postmaster wil be required to cornplete and
expenditure form,
c. Recovery from sums due - Where Po!
under the Network Transfe ion Programme,
the Postmaster’s compensation payment.
c Recovery from third party ~ Some former Postrnasters will appoint a third party
Paypian) to consolidate all of the former Postmaster’s debts. The third party wil
repayment to the various creditors. This will ti
sum due.
asters decide to leave the Post Office Network
can deduct manies due to it from
leg.
S legal routes for recov
7.2 Inthe circu Y
a ounty Courts te reduce the former Pi
may pe via
debt.
ranches as opposed to
of debt from trnaster who has died in 6 will be dealt with by the
5 Debt team. it is important to note that each case must be treated with
ue diligence. Where POL has contracted with a c opposed to an
may be able to continue operating. In such an instance POL will
its business as usual policy.
al, th
centinue to deple
ext of kin te notify them
ment, giving 21 days te respond. If a
3 the next of kin. esponse IS
her the address for the next of kin
aster’s family is available. If the
2 The Form ents Debt team will write (rec
of the cutstanding debt arnount and requesting r
d, repayment detail
nts Debt team will rese:
ct or whether another contact v
t and mo response has been
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9.3 Note that if POL was unsuccessful in recovery, the Former Agents Debt tearn will weigh up
the cost effectiveness of pursuing the debt priar to referring it to POL’s legal repres:
regards the repayment options available to former Postmasters refer to section 8.0
10.0 Risk register/Branch profile
101 Post e
on the branch risi
they are to ne!
aisterfira cach I performance ‘yrofle as be
@ to repay outstanding losses in full:
a) Postmasters that cannot pay within 12 months and/or need a lump sum to settle the
b) Postmast
rg an a current repayment plan.
10.2 The Security tearn will be notified via the DFR Report of this inferrna’
TL Securing the debt
414 There may be circurnstances wher 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 lose
significant amounts of money to former Postrnasters.
11.2 The debt may be secured in two ways:
Ae Local and Mains Post Office agreements Operators
the performance of
a. Guarantees (proactive) ~ under
operating as a com e obliged to provide guarantees to se
the Operator's obligations t ent, where the comp. as existed for less
then three years, or if the com med a financial risk {t ‘portant that POL
explains clearly to the guarantor that they will be liable for the debt. The Guarantees jn
Company to Compans ships policy should be referred.
debt against property of
is measure shauld not be
b. Charges on property (reactive) ~ POL may consider securing t
the Postrnaster by placing a charge on their property.
implemented without informed advice from Legal Services
41.3 The Postmaster should obtain independent legal advice before providing a Guarantee or a
Charge. PGL should obtain an independent Legal Advice (ILA’) certificate confirming this.
This wil minimise the risk of the Guarantee or Charge being set aside.
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12.0 White offs
pect of write-offs are not taken by groups but are the re
vho bear P&L accou for those decisions. The
2 ct to audit.
ibility of
s for a
5 Contracts Deployrnent Manager or BAU
mal Man I
Services & Transforr
_ Network and Sales Director
st its cost centre , in which case
12.3 Alternatively, FSC may write off debts <
a isation limits below will ap;
‘Fear Leade
Senior Manager
I Head of FSC
Finance Director
bt owed by former Postmasters the authority limits for write-
nts Debt Tearn Leader
Former Agi
Relationship Manac ser
I Former Agents Debt
VHead of FSC
1G
13.3.6
13.4
13.4.4
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POL acknowledges the potential financial impact and stress that
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.
There are two rautes by which Postmasters might instigate the dispute process:
« Transaction Corrections
e Branch Discrepancies
Transaction Corrections
Branches should contact Transaction Correction issuer within 7 days of acceptance at
branch to challenge the ence vided te support the Transaction Correction wherever
possible. Where tirne permits prior to Branch Trading, branches should challenge prior to
accel
If the challenge is accepted by POL in full or part at this stage, a compensating Transaction
Correction will be issued te clase the dispute.
suspend the debt recovery
until a response has been made.
40
sions
issuing team will
Gn receipt of supporting Informat
process, if the Transaction Correction was settled centrali
Written submissions to the specific team should receive a written response, withi
working days, in line s standards. It is recommended that written subrni
be sent using a prio!
Ss
Trading roll over.
nid request further time to investigate
2 number will be provided.
Branches should
and present supporting infermation.
4 rerere
Supporting inforrnation to support any dispute must then be presented by the Pastmaster in
ng via Special Delivery to Agents Accounting Team ( 2 Future Walk Chesterfield S49
IPF, within 7 days quoting the above reference number.
The Agents Accounting Tearn will then present to the issuing tearm who will suspend the
debt recovery process, if the Transaction Correction was settled centrally, until a written
response has been made. FSC will provide an update on the query or a resolution, within 10
working days.
Branch Discrepancies
The resolution of branch discrepancies is the responsibility of the branch.
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13.4.2 If the Postmaster believes a transactio
appropriate departr nent in FSC via NBSC.
update NBSC of any changes to a de
should be presented and resoluti ows the transaction
recommended that this be sent using a priority service. FSC wi
3, within 10 working da
n correction process. If fs
update on the
provide an
13.5 Further Review
If the Postmaster bet
supports their dispute b:
submission to:
The Re
2 Future Watk
it recovery process, If settled centrally, will be suspended pending a written re
with Business standards.
13.5.3 A written response will be provided, within 20 working days, in J
‘o be able to view.
All corres @ included on the Cloud City for the N
h then becomes iiable for the settled
made good.
Where a equently not 4
centrally debt and no repayment w
13.5.6 The decision of the Relationship Manager
44.0 Debt Disputes - Nen-transactional debt
counting Team
ai POL who raised the inveke.
g Team to confirm the olin
pond to
postmaster
ice ammount (Le. he
orm to the Accounts Rec
PART 2
1.0 Applicability
This policy applies to all contracts types ar
Office branches.
service debt:
Guarantees in Company to Company
Contract breach
Burglaries and Robberies
lings between POL and all Postmasters of Pest
The above list is not exclusive and consideration of other policies may be required depending on the
particulars of each case,
3.0 Implementation procedures
Process Chart A
Process for recovery of in service transactionai debt incurred by an
Postrnaster.
pc ~ Transactiona
debt recovery doc
Process Chart B
I Process for recovery of in service non-transactional debt Incurred by an
Postmastei
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Process Chart C
Process for recovery of in Service debt incurred by a former Postmaster.
Postmaster debt reco
Process Chart D
Process for agreeing a repayment plan beyond 12 months for the
recovery of in service debt.
4.0 Standard letters and documents
peO - Instalment
plans beyond 12
Standard Letter A
Statement of debt detailing amount of outstanding transactional or non~
transactional debt.
slA - New Statement
VS 05 20i4.deo.
Standard Letter B
Reminder of debt, following Standard Letter A detailing ariount of
outstanding transactional or non-transactionial debt.
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i Subsequent t to val
Standard Letter C
ter
ntary agreement, letter agreeing with Poste
oy non-transactional debt will be deducted from
'
I that transactional or non-transa
_ in one instaime
' Standard Letter F
fees/remuneration none instalment,
Standard Letter D
Subse: to voluntary agreement, letter agreeing with Postmaster
onal debt will be deducted from
er a number of instal
sk - Df Voluntary
single paysrent. docx
SD ~ Df Voluntary
instalments. dock
Standard Letter E
Letter of waning te the Postmas
one nt fram fees/rer
will be taken
tating that payment
ratio:
er of warning to aster stating that payment will be taken
in a number of instalments from feas/remuneration.
I Standard Letter
I Standard Letter
“Standard Letter L
I Letter te Postrmast
Standard Letter G
First s
ement of debt letter to former Postmaster.
. sstletter to
ostasters.¢
Standard Letter H
Second letter to former Postmaster reminding of unpaid debt.
ter of action te former Postmaster subsequent to Standard Letter I
er to Postmaster requesting additional information where request
placed to rep: Z
Exceptional
I sb -
request for Instalmer
cting the
er debt fe ror
rally.
lor over a nurnber of
a further trar
further debt from fees/
14
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Pro Forma A
Income and expenditure form to be sent to a current Postrnaster for
compietion where he requests to repay a debt b
is nits,
pYA - Incore and
Expenditure Form Ext
Pro Forma B
income and expenditure form for completion by a former Postmaster
‘ he requests to repay a nding debt via s ng order over
an agreed period.
pfB - Income a:
Expenditure Former
15
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