POL00105418
POL00105418
Gayle A Laverick To: Lynn Hobbs/e/POSTOFFICE(.,
ce: John Breeden/e/POSTOFFICE
06/11/2007 21:22 Subject: Network Efficiencies
Hi Lynn
I've had a look at the Network Efficiencies paper and had a think about what we talked about. As John
points out in his e-mail, these observations/suggestions would need to be fully looked into before
being implemented. I am also sure that someone has probably thought about some of these before, so
apologies if I'm reinventing the wheel or stating the obvious.
1. Visibility of Performance and Efficiency Opportunities within the Network
Until we get to a point where we can see the full cost of a branch in P+L terms, we will only be
scratching the surface in terms of what efficiencies can be made. At the moment, we have different
teams holding accountability for how a branch operates within their remit and on their scorecard. For
example, P&BA are measured against debt management, all support costs get allocated to
Operations, whilst Heads of BD see very little other than sales, agents pay, ONCH, FONCH and
compliance. The finance team may see this, but it doesn't filter down to the line or branch level.
The branch P&L would need to be split into income, controllable and non-controllable costs. The
granularity of the information would depend on the requirements, but you would need to include things
like NBSC allocated costs, costs for Stores and Stock delivery, and if you wanted true costs, you
would also need to build in costs for non-conformance. At the moment we have different teams such
as Product Support, P&BA, Product Managers, NBSC, Inventory Team etc all making interventions to
branches and we have no idea of what this costs. For example, we have just undertaken an exercise
of writing out to community branches who have still failed to do the test. We have asked them to
submit their training receipts to us for checking. My calculation for this is that this is going to cost us
£1200, and this cost never gets allocated anywhere but gets absorbed.
The branch scorecard would create ownership and provide incentive to identify and resolve the
issues, rather than just passing it on.
2. One team analysing information coming into a central point
If you created a branch scorecard, you would also need a central team to pro-actively manage
non-conformance and spot problems before the case becomes a bigger issue and the branch poses a
bigger financial risk. The teams within the different directorates work in silos and don't talk to each
other when they have suspicions about a branch. Even within our own team, the tools that we have
don't help us do this. For example, I had a quick look at the EFC to understand what went wrong at
Bolinbrook, where there was an £85k shortage following audit.
® — It took me about an hour to trawl through the documentation and understand all of the different
interventions
® Aconcern had been raised by the Training team in 2006 when the postmaster was appointed, but
nobody took ownership of this
® Branch performance was poor and there were various indicators - rolling losses, lax security
procedures resulting in warnings, compliance workbook not being completed, accumulation of
Transaction Corrections resulting in debt of over £4.5k, warnings being issued for people being
behine counter, non-completion of Horizon roll-over, unauthorised closures, cash declaration
non-conformance and BT bad debt.
@ — {tis only when people start "having a look" that they uncover something more sinister going on,
and this is often too late.
What would be the ideal solution would be the development of a central database that pulls
information from a variety of sources and allocates the branch a performance score and raises flags
when intervention is required, and the severity of the non-conformance levels. This would work in a
similar way to the performance database that is used to support the Core and Outreach assessment
process. This system would also enable you to identify on you "worst" 15% and either improve them or
manage them out.
The risk is that if we can spot things sooner, we may have a higher suspension/termination rate that
POL00105418
POL00105418
we can't cope with. This would be especially difficult to manage if the business don't try and make the
proposition of running a post office an attractive idea.
3. Review of the audit risk model and who controls it
The proposal would be that the central point who analyse the information would also take control of
the audit risk model, and prioritise visits. The current model is operated by a team who engage very
little with Network, and previous findings submitted demonstrate that the line submitting special audit
requests, often results in a greater loss being identified. Looking back over previous special audit
requests submitted for large scale losses, there seems to be a common factor between them.
e The spmr is often vague regarding what has caused the problem
@ When tackled regarding non-conformance, the spmr says they are aware of it but have actually
done nothing to rectify the problem - i.e not reported faults to NBSC
@ The spmr cannot be contacted or is always “unavailable"
® The person who has submitted the audit request has done a bit of digging and communicated with
other people, and often found that other teams are having problems with the same branch but for
different reasons.
Therefore, whilst a model may highlight poor peformance, it often takes a personal interaction or
knowledge about the branch that confirms whether the branch is a risk to us as a business.
In the case of Bolinbrook, an initial special audit request was submitted in April 2006 due to concerns
when the branch was having losses at £4k. If that audit had taken place at that point, the loss to the
business would have been far less than the £85k it had escalated to in just over a year. However, for
whatever reason, the request was sidelined and never took place. When Pat submitted the request
again on the 8th May following the 42-day process report, the branch was visited within 2 days. Only
then was it deemed serious enough to warrant a visit.
In terms of the risk model the following has been identified from the information supplied:
e There are 25 data feeds that flow into the audit risk model
e None of the data feeds are given a priority basis, and nothing is classed as more high risk than the
other
@ The risk model has not been constructed around where the opportunity is for fraud and the
methods that the spmr would use to take money - i.e, creating a gain to take the cash, having high
cheque figures but remming out a lesser figure (i.e keeping a personal cheque in the drawer to
cover their cash and carry fund!)
@ The data feeds are not very sophisticated to take into account where there may be a problem. For
example, they only look at the value of TCs issues and ignore the volume that the branch is
generating. Only when this gets to a figure of £25k do they class it as high risk. Also, there is no
correlation between the TC volume/value and the branch remuneration. If the branch has a
remuneration of £18k, we wait until it reaches £25k to go out and have a look. Again, with things
like ONCH levels, there is no correlation with the size of the branch. It becomes a high risk branch
when it gets to £25k excess, but it doesn't take into consideration the size of the branch and the
variation between in-payments and out-payments.
Therefore, I think the model needs to be reviewed, otherwise we will be wasting our time where there
is no loss, or the loss is that great, we have no chance of ever recovering it.
4, Review what is done following an audit taking place at the branch
Currently, there is no process for what happens following an audit taking place at a branch. The
information is sent for filing, and nobody takes ownership for rectifying the issues in the branch. The
only follow up that the audit team do is where the spmr has been suspended following a cash shortage
and has been re-instated. The branch is classed as high-risk and is then put back into the model for
review.
A full process of how non-conformance identified at audit is then managed needs to be developed. We
also need to define what the process is for how we manage branches who have a cash shortage, but
make it good and are not suspended. A similar approach to the ONCH visits could be taken, and those
POL00105418
POL00105418
branches who have opted to make good are identified and someone like a member of the Outlet Field
Support Team could be asked to go an spot check the cash, a number of weeks/months after the visit.
5. Manage Losses and Debt more effectively
How we manage debt also needs to be completely reviewed and can be split into 2 areas.
a) Former spmr debt
e@ In April 2006 we started with a figure of £5.2m to recover from former spmrs. By March 2007, this
figure increased to £5.3m. In the 12 months between, £2.1 m was recovered, meaning that an
extra £2.2m had been sent to late account to recover.
®@ By Period 6 of this financial year, the outstanding debt to recover increased to £6.7 m. In the past
six months, £683k has been recovered, which means that in 6 months alone £2.1 million has been
sent to late account, which is nearly the figure for the whole of last year.
@ We have no information as to the different categories for this debt - TCs, robbery/burglary, losses
on suspension
® The above information shows that we are leaving it too late to tackle the issue and too much
recovery of debt is being pushed in this direction. This has the potential to rise massively with the
Network Change Programme.
b) Current debt
I don't think that even P&BA have a handle on what this looks like. Nicky did some analysis of the
information that is produced in Chesterfield to highlight the branches that have the largest
discrepancies per Branch Trading period, whether that be a loss or a gain.
The reports analysed between 26th July and 20th Sept show the following:
® 30 branches with the largest discrepancies within the network opted to "make good" a total loss of
£678k. The amounts ranged from £4.5k to £161k. I think that it is unlikely that branches would
have made a figure of £161k good by putting the cash in, therefore there is a risk that in the top 30
branches alone, there is a risk of £678k being unaccounted for.
@ 39 branches opted to settle losses centrally that equated to £674k. The ranges for these branches
was a lot lower that the ones who opted to make good, and ranged from £4k to £57k. This implies
that some are not as eager to press settle centrally if they think it is going to come out of
remuneration.
® 46 branches had a gain, which implies that they can take the money out to balance the account. In
this period, this equated to £1.3m, with a range from £5k to £114k. Again, there is no confirmation
to say that the money has been taken out, or any challenge to the branch to get them to settle
centrally.
® Only 21 branches who had a gain decided to settle it centrally. This amount totalled only £346k
and the ranges were from £6k to £48k.
Therefore if we take John's suggestion of charging an interest rate for DFR, there is the opportunity to
deter it coming from remuneration. If we assume that the branches who opt to settle losses centrally
end up as DFR, based on an interest rate of 7.5%, this would equate to £47,156 in interest per year.
However, there would be the risk that money just wouldn't be made good.
The other issue is that there is no correlation between losses, gains and DFR. There is no tie up or
challenge for branches who have a gain in one week, take the money out, have a loss the next BT
period, dispute the transaction and then opt to pay by DFR, eventhough we assume they have had the
money.
One suggestion that was made was that we could do something similar to multiples and opt to settle
everything centrally. A customer account would be produced every quarter and the spmr would be
sent an invoice to settle the account.
6. Manage non-conformance more effectively in the short term
POL00105418
POL00105418
I've touched briefly above on what I think we should be doing as a business to manage
non-conformance more effectively in the long term, but we have had a think about what we could do
within our team in the short term.
Basically, we need to be concentrating on things that will bring us a return.
a) ONCH
The size of the prize is basically the difference between current performance and target. We would
have the capacity to make 100 extra calls per month on top of what we already do, but these would
need to generate a cash return to be effective. The calculation has been made that based on the cost
to make the phonecall and the interest rate, we would need to ensure that £6k is returned on each call.
Therefore the information that we use would have to be completely accurate to make sure that we are
contacting the right branches.
The other suggestion that we made with ONCH was charging branches for not returning the expected
levels of cash. The branches where we have least control over are the surplus branches, as we cannot
control how much cash is received, but we rely on them to return. Therefore, what we could do is
charge the branch with the cost of delivery, admin fee and the interest rate of the surplus cash. This
would be completely reliant on accurate information and the proviso that we didn't have a cash van
failure, but it may focus the mind.
We also need to get the Inventory Teams to take more ownership up front. Because of the IA, we don't
have enough historical information to prove where we have had influence, they would get the money
back into the cash centres, 6 weeks earlier than we could.
b) FONCH
The size of the prize is very much dependent on the difference between target and actual
performance. Like ONCH above, the intervention that is made should cover the costs of resource and
the interest rate. The problem with the FONCH branches is that we are less likely to see the return due
to the smaller numbers involved. This is not helped by the ratio versus sales that is used. For
example, a branch may sell £1000 of currency per week, and has £3000 of holdings. This gives the
branch a ratio of 1:3 and this is one of the branches that we would focus on. However, even if we
recovered the £1000 surplus, it would not be enough to cover our costs.
Therefore I think our focus needs to change within the team. We should take ownership of the bigger
branches as the intervention would be quicker than the BDMs and the size of the prize would be a lot
bigger.
As mentioned above, we need to be in a position to put a cost against the processes that we define, to
assess whether what we are doing is worth it. If there isn’t a financial benefit, we would need to
understand if there are different drivers why we do something, ie. brand damage, client dissatisfaction
etc. I also agree with John's point that the marketing team don't put non-conformance into their
business cases, as they expect the cost to be absorbed somewhere else.
With regards to other information you needed, the audit results following robbery and burglary costs
weren't included in the info that John provided. This information has been provided by Chesterfield
and currently stands at:
2005/2006 = £1,315,586.94
2006/2007 = £1,784,672.90
2007/2008 = £348, 546.67
Common sense dicates that the risk is higher at this time of year, so the potential is that this figure will
only increase and exceed last year's out-turn.
I hope this is the type of thing that you are looking for.
thanks
POL00105418
POL00105418
Gayle
Gayle Laverick
Network Co-ordination Manager
POL00105418
POL00105418
Outlet Support Team Meeting 14" November — Suggested
Content
The overall theme coming from the suggestions for the content of this event is to
look back and see what has been achieved and then focus on planning for the
future.
The suggested areas of content for the event are as follows:-
Session 1 - Network Directorate and the Outlet Support Team — Lynn & Paula
Vennells
Paula Vennells:-
® Look back over the performance of the Network Directorate recognising
what has been achieved and what we wanted to do but had to prioritise
downwards.
@ Paula's vision for the Network Directorate over the short and medium term
ie. 12 —24 months.
e Aview of the priorities for the next financial year.
® Progress against the business plan i.e. Forward Four 2 Eleven
@ Paula's view of the business and how it compares with the external
market/her previous employer — her thoughts of the challenge pre joining
and her views after 9/12 months.
Lynn — similar to Paula's session but at Outlet Support level
® Look back over the past year since OD and recognise what has been achieved
and what we wanted to do but had to prioritise downwards. Incorporate
changes/evolution to roles that have occurred over the last year.
@ Vision for the future the Outlet Support team over the short and medium
term i.e. 12 —24 months.
@ Priorities for quarter 4 and the next financial year for the Outlet Support
team
@ What is expected in future in respect of individual and team performance
given the introduction of broadbanding — standards of performance
expected.
POL00105418
POL00105418
John Breeden To: Lynn Hobbs/e/POSTOFF!
, Laverick/e/POSTOFFICE!
05/11/2007 21:16 Norbury/e/POSTOFFICE!
cc: :
Subject: Outlet Support Team Mtg - 14 November
All,
Ahead of the conference call on Wednesday please find attached the following:
- details of who will be attending this event
- suggested areas of content for the event. I hope I have not lost any ideas in pulling this consolidated
document together.
In respect of the conference call at 11:30 the number and participants code are:
Fel no
Participant code -:
Regards
John
Outlet Support Team Meeting Attendees 14.11.07.doc Outlet Support Team Meeting 14th November - Suggested Content.doc
John Breeden
National Contract Manager North
Outlet Support Team
Network Directorate
Post Office Limited
Post Office Limited
Registered in England and Wales Number: 2154540 Registered Office 80-86 Old Street London EC1V
9NN
The Post Office and the Post Office symbol are registered trade marks of Post Office Limited in the UK
and other countries.
This email and any attachments are confidential and intended for the addressee only. If you are not
the named recipient, you must not use, disclose, reproduce, copy or distribute the contents of this
communication.
If you have received this in error, please contact the sender and then delete this email from your
system.
POL00105418
POL00105418
Doles or diferent durcdireke
Network Efficiency
The whole subject of network efficiency can be as narrow or as wide as we care to make it.
My view is that if we consider the costs areas in the network we need to review all of these to understand the prize, the
cost of delivering the prize and where the tipping point is.
Tessuree Wapucetions
Lean programme ©
In a nutshell and as I understand it this is about fundamentally changing our approach, our processes and how we
deliver across a range of internal activities. One area that has been reviewed is Crown Offices and it's unfortunate that
our meeting on 7/1 lis in advance of the presentation to be delivered by the Borton Group who are consultants,
providing support to Neil Ennis about what the prize might look like.
Areas in Crowns likely to be highlighted in the review are:
Counter serving — are we as effective and efficient at this as we might be particularly following changes to product
mix. The review may well highlight the inefficient way in which we find any number of ways to process what arguably
seem like very similar or the same type of product
Back office admin — what is it costing and are there better ways of doing this
BM support — we're in the process of changing this — is now the right time? Is it a done deal in terms of Bol financial
support
There are other areas within the team where Lean could make a difference and I'll be in a position to discuss in more
detail after the presentation on 8/11
Branches
The cost of operating some of our branches far exceeds what we earn from them in income. I'm not sure how much
of this has been factored into the NC area plans, certainly I know some has but the information to base some of these
decisions on has not been as good as it might be. The following gives a favour of where there could be opportunities.
We currently pay £1.125m per year in property costs to keep open 20 branches
We have around 50 branches where we have temporary agents running the branches and we are paying a fixed sum
over and above the remuneration warranted by the branch to keep it open. The additional cost hasn't been quantified
because of the way in which this is recorded in Salford. Work is underway to quantify this
We have a number of branches operating with a temp for a considerable length of time, years in some cases. We
might want to consider advertising these branches and if no-one is interested taking a pragmatic decision to close
We are committed to paying transition or top-up payments in branches converted to franchise status from Crowns.
There is little we can do about this unless we have an opportunity to franchise with an alternative partner which might
reduce the payment
We run three branches in various Government buildings e.g. House of Commons. These are operated by employees
and are Crown Offices. There could be scope to run these as agency branches and make a saving not yet quantified
We have 46 Crown branches with lease breaks over the next three to four years, 19 of these are within half a mile of a
WHS location and whilst some of the WHS stores may not be able to accommodate the Crown branch there could be
scope for further franchising dependent on the ET's view of commitments given
Losses and Debt management
We need to understand in financial terms the level of branch discrepancies resulting in real cash losses to PO Ltd to
determine what more we could do to reduce this figure and whether the cost of not doing something else is greater in
the long term.
POL00105418
POL00105418
Avery brief analysis of the audit findings revealed the following:
2006/07
*
*
1396 branches were audited in 2006/07
Shortages were discovered in 937 branches
The total amount of discrepancies found in branches following these audits was (£3.788m). This figure includes a
number of accounting discrepancies including Transaction Corrections waiting to be issued by P&BA;
unfortunately this is not quantifiable from the information provided.
895 branches were visited as a result of being identified by the Risk Model as requiring an audit. Shortages were
found in 593 of these branches resulting in an overall discrepancy of (£1.285m)
295 branches were visited following requests from various people (Outlet Support team, BDMs, P&BA, and
Investigation) for ‘special audits. Shortages were found in 237 branches resulting in an overall discrepancy of
(£2.411m).
Shortages in 82 branches were due to ‘dishonest acts’ and the resultant discrepancy was £945k
Shortages of over £50k were discovered in 19 branches. The discrepancies in these branches amounted to
(£1.629m) in total
(£1.782m) was posted to late accounts which in the main means we have to chase this debt with ex
subpostmasters
2007/08 (information up to P6 - end Sept)
e
544 branches have been audited up to the end of period 6
Shortages were discovered in 406 branches
The total amount of discrepancies found in branches following these audits was (£3.865m) although a shortage
of (£1.46m) in one branch has now been resolved. Even so the trend is upward. This figure includes a number of
accounting discrepancies including Transaction Corrections waiting to be issued by P&BA; unfortunately this is not
quantifiable from the information provided.
325 branches were visited as a result of being identified by the Risk Model as requiring an audit. Shortages were
found in 233 of these branches resulting in an overall discrepancy of (£2.322m)
188 branches were visited following requests from various people (Outlet Support team, BDMs, P&BA, and
Investigation) for ‘special audits. Shortages were found in 153 branches resulting in an overall discrepancy of
(£1.532m).
Shortages in 36 branches were due to ‘dishonest acts’ and the resultant discrepancy stands at £359k
Shortages of over £50k were discovered in 12 branches. The discrepancies in these branches amounted to
(£2,602m) although the largest figure of (£1.46m) in one branch has now been resolved. The question is how can
one community branch accumulate discrepancies of £1.46m without the risk model pi icking this up?
(£1.027m) has been posted to late accounts which in the main means we have to chase this debt with ex
subpostmasters
Ultimately some of the above will not result in loss to the business but there is obviously a cost to the business of
managing all of the errors creating these discrepancies. Branch trading losses are not included in the above which is
another source of significant potential loss
I would hope to have further analysis and proposals around debt management and losses for our meeting
Crown Office losses
These continue at a very high rate and in most cases result in a loss to the bottom line. Again I would hope to have
further analysis for our meeting © ITAA Was the last CMe ACCOM L368 auctrted ?
Recommendations
eS Accombabilaby fer ieye.s -
Quantify the potential ‘size of the prize’
Quantify the resource to deliver and impact on other activity
LEAN
POL00105418
POL00105418
FON CAUS = ©.000910 =dadly we
SF calls = 2. 4AxST= £140.36 cosh
Belo 6 HSjoc® = =f 6,900 boners may chop
Understand the impact of LEAN in terms of how it affects the Network Directorate and agree an approach to
delivering cost efficiencies — suggest further meeting required after 8/11/07
Branches
Consider radical approaches to branches costing money to run based on the following:
@ Is the branch essential to meet the access criteria?
@ How much income does it currently make for PO Ltd?
@ What are the actual costs to PO Ltd?
® What potential for growth has been identified by the sales Potential model and what would be the impact.
financially if a branch achieved these levels
® What level of costs would PO Ltd be prepared to support ongoing to maintain the branch
Losses and debt recovery
Understand the actual cost to the network — what ends up on the bottom line?
Quantify the cost of non conformance —is this feasible?
Determine actions to improve conformance, what would these cost and how would we deliver these?
Agree approaches with other PO Ltd teams — cash management, P&BA, audit and compliance
Crown Office losses
Assess impact of new policy recently communicated
Consider further actions to reduce losses — e.g. possible impact on Goldmine pot?
Other issues to consider
WU and NFSP
a» Role @ Core + Qube dotobnse?
~ cask 6y compliance ~ HomePrenr Mis ~setis?
se Trae cost 6y bunch is mosked by Ons Acoma nay DreweclLures
4 the “visilpwiby * Gy the coub
—sitsan Afferent sconcomds + there ws no mary OY rock
the infomation .
— ATH RSy aunches — how mowy hove Le gor
_ 3k GY complana ~example resowrce ee
ae LDret do Grar Francie Modes Ia lee Fev oY
suppor + OVO c x
—~ Drct ouz the Dwiriness meals ,
POL00105418
POL00105418
ONCHIFONCH = Length a cau
Cagk Gy resource
Interest bo lusine ss
aide_rmontonse 3d — taken from orm insy
. a cost —eboraang roPe.
+h
on Grhacr Feaums fo deiver chon
y Outlet Suppo olten ret
oF aA lecan Iran PO oLM gasp kale .
— Wovally end WP piclcTAg wp P
~ Techroogy SOuihions -Lhat Cond me Unplornant Hho Lowd reclua
Pesonnree I
4 Dd jue Want be ao OLN TOU. BY Nor accapysy Choquar’ net nanid
Hus sowre us ost lun iners? :
ab lesue 6 hows ve put product busuiers cares kyet nas .
= Showld Le be Dac \ p
ws cng into plan a buber fe
NON-COr Brwence. +
erisk lo assets
erisk to bard
Ss we Gr Qsic
Cast@r ONCM pronecou
= Qudir Loss
ONCH
FONCH =EI6 S48. 0 for GE Leaks I
\SSermeter (924 hous
F.6S pec hour
=ETBL por ISmauke cod
2 Mer PO,
oo + COS OY COU
NSO x Gsh 6 call. , geS9 hr each
& $S3-66 Must be.
Promeceds mada. , returned »
POL00105418
POL00105418
A realistic review and an indication of the challenges that lie ahead at two levels i.e.
Directorate and Team — this would be the session pre lunch. All managers given the
opportunity to ask questions of both Paula and Lynn
‘ oo Session 2 — Team Introductions
Presentation from each team leader to summarise the main roles and
<a Separates activities of each team. bcc 5 ick Has be belioe by havect
the stow?
fe ee As this is the first time all managers from Outlet Support have been together a short
VE Se \5 Session 3—Cross Functional Working
& La 7 ~~ \ Linking in to the activities mentioned is session 1 for what we have to do in the
a) forthcoming financial year we could look at:-
Efficiencies - establish a number of syndicates to look at different attributes of the
efficiency work the Network Directorate have initiated as follows
ONCH
- FONCH
- Debt management process (debt recovery) split across concurrences, aged
debt, former agents debt, debt associated to conduct and culpability work, property
debt, cash declarations, transaction corrections, crown network debt
- Audit risk model
- Branch profitability
This session is all about idea generation of what could be done differently to
improve the current situation on the above and each team would need to be
provided with a brief of what is expected and then would present back to the group.
Probably 45/60 minutes for idea generation and then 10 minutes to present back,
And/or
Managers using input from session 1 work in focus groups to look at what Outlet
Support specifically need to focus on over the next year and then longer term up to
2011 —what do we continue to do? What new activities do we want to do? What do
we stop doing? In addition have a group looking ‘outside’ the box maybe, looking at
radical ways of working and how we might approach Outlet Support tasks/activities
differently in the future — there might be some blue sky suggestions but at least it
will give an opportunity to tap into people's innovation/creativity?
Session 4— Team Priorities
Taking into account what has been said in the day, from the work currently being
undertaken by teams, each team prepares a draft high level plan i.e. key items to be
included in the plan and identify areas which can be objectives for different roles in
the team — allow 60 minutes. Lin and my team would have to work together on this.
(This work is then taken as input to a planning day for the Outlet Support Lead
Team in either Dec or Jan so we can align with more information coming from the
Network lead team and the POL business plan?)
Session 5 - Review and Close
Summary of outputs of the day and next steps.
Gain input of how useful attendees have found the day and if there was to bea
similar event what changes individuals would like to see being made to the structure
of the day and what suggested areas of content they could see and event of this
nature being used for.
POL00105418
POL00105418
POL00105418
POL00105418
Outlet Support Team Meeting Attendees — 14" November
Julia's team
Stuart Pilgrim
Roy Grindrod
Gary Adderley
Wendy Mahoney
Mike Jackson
Patrick Moss
Frances Burton
Stan Ashcroft
Peter Jackson
Julia Mann 10
Gayle’s team
Vicky Harrison
Nicky Barraclough
Anne Allaker
Shaun Turner
Pat Bursi
David Sears 6
Lin’s team
Sue Muddeman
Alan Lusher
Carol Ballan
Elaine Ridge
Nigel Allen
Steve Utting
Denise Reid 7
Peter's team
Wayne Cowan 1
John’s team
Brian Trotter
Lesley Joyce
Michael Haworth
Karen Arnold
Glenn Chester
Paul Williams
David Southall
Daviyn Cumberland 8
POL00105418
POL00105418
John Breeden To: Lynn Hobbs/e/POSTOFFICE(
. cc: Gayle A Laverick/e/POSTOFFICEt R
02/11/2007 16:42 Subject: Debt Management “ GRO
Lynn,
Following our telephone conversation on Monday and the document you circulated on efficiencies to
Gayle and myself here are some ideas for debt management that might improve the situation. They
are only ideas and would need to be worked up to see viable or politically acceptable.
Settle Centrally Button - this facility appears to be being abused by parts of the network ie this function
is used so the branch can balance on the given night but no real consideration is given to how the debt
will be settled, how it has arisen and then the concurrence process has to kick in to follow up payment
of this debt which is labour intensive. Somehow greater control has to be implemented on how this
button is used (in discussions with Martin Ferlinc and others they are totally against the suggestion of
removing the facility as this apparently is the only way of knowing what is outstanding with the removal
of the suspense account). Perhaps some kind of reminder needs to be issued under the
circumstances which SPMRs use this facility and in using the facility what they are agreeing to link to
the contractual clauses on losses. Occasionally this function may be used where a loss is in dispute
but this needs to be registered and authorised as an allowable for using settle centrally.
Repayment of debt - where a SPMR looks to repay by deductions from remuneration (DFR), first we
appear to allow this method of repayment irrespective of the individuals ability to repay being
assessed (the old hardship process where accounts were assessed etc does not happen now) so we
would need strict criteria over who qualifies for this method of repayment, the max term and how many
can be running concurrently/if you can top up with further losses. Additionally fora SPMR this is a
great way of repaying as it helps their cash flow at the detriment of POLs and is an interest free loan
and if I am not mistaken losses are an allowable expense in SPMRs business accounts. Therefore I
would have thought that it is not unreasonable to charge an admin fee for such and arrangement to
reflect the costs of setting up DFRs and any work undertaken to get to this stage and also that they
should be charged interest on the balance outstanding similar to that charged on any commercial
loan/overdraft. (The present arrangement of an interest free loan which is what a deduction from
remuneration is would probably be viewed as a benefit in kind should the Tax Authorities look at it).
Repayment of debt by debit/credit card - do we look to offer a ‘discount’ off the debt if this method of
payment is used due to the lower costs of processing this type of transaction via the banking system ie
they are cheaper than cheques for processing and if payment is rejected this is identified more
quickly.
Debt free branches/compliant settlers of debt - do we offer a bonus to branches who settle debts as
they arise ie branch discrepancies and clear all transaction corrections as they arrive or where they
use the settle centrally button clear immediately. This scheme could be set up in bands ie amounts
cleared in a year not exceeding in total £1k receive a bonus of x % of their remuneration, not
exceeding £5k a bonus of a lower percentage of their remuneration.
Savings Pot - allow SPMRs to save part of their remuneration into a pot which can be used when a
debt arises - this money in the pot could have interest applied to it similar to an Instant Saver.
SPMR Applications - stronger vetting of existing SPMRs who apply for another branch in respect of
past performance in settling debt and errors in general ie transaction corrections etc
Waiver Scheme - offer a scheme similar to the insurance waiver on franchise branches in respect of
debt which would be an up front payment which would allow debts to be cleared by POL where a
SPMR has been compliant but an error has subsequently arisen they were not likely to be aware of at
the time of the transaction.
Consistency of application of debt management procedures across POL - there are different
approaches adopted to debt management by differing teams in POL which needs to be eradicated and
likewise when a debt can be written off needs consistent application.
Transaction corrections - the production of transaction corrections is very slow and I realise this is
POL00105418
POL00105418
sometimes due to the client but on other occasions it is probably down to POL. Do we put a deadline
on the production of transaction corrections whereby if POL cannot produce within an acceptable time
which would have to be carefully defined this debt is not pursued. (Whilst I realise it is difficult to draw
comparisons between POL and other operators due to the vast number of transactions undertaken but
if you take a bank or a building society it is highly unlikely they would wait 6 months before notifying an
individual of an error in a mortgage/loan payment)
Transaction corrections - there is a need to ensure adequate quality evidence is provided for these
errors which basically is difficult to contest. Redefine how transactions corrections can be contested
ie does the SPMR have to prove the did not make the error for a TC to be cancelled?
Former SPMR debt - this is probably where the bigger sums of money are, particular in relation to
SPMRs who have been terminated following a loss - there is a certain amount the individual leading
on the conduct case can do to ensure steps are put in place for recovering debt which if this is focused
on as has been proved this financial year to a limited degree can reap rewards eg undertakings with
SPMR solicitors where the business is being sold so from the proceeds our debt can be repaid.
Whether we need to go further that this in respect of applying to have a charge registered over a
property to secure repayment of debt would I think need to be taken on a case by case basis and
recognise (i) the cost involved and (ii) a POL/RM charge will always be second to the bank who has
the mortgage on the property. The greatest are of difficulty in recovery of debt is where there is no
surplus cash or the SPMR is declared bankrupt.
Resigning SPMRs - transaction corrections come through following transfer and the outgoing is then
pursued to clear the outstanding amount - could the last months remuneration not be retained for a
period to allow for these transaction corrections to come through - we would have to have a cut off
point at which time we could still apply transaction corrections against withheld remuneration before
this remuneration is released to the outgoing SPMR.
Bond - take a bond from SPMRs up front which can be applied to settle debt - this could not apply
retrospectively I dont believe and again could attract interest whilst the bond is in place.
MI - we need better MI as at present we dont appear to have a good reporting system in respect of
debt or if we have I have not seen it eg something like the suspense reports which showed rolling
losses etc. My understanding is POLFS has capability to produce an array of reports but I am not sure
we have these in place and if they are timely.
Recognition for staff involved in debt recovery if debt recovery targets were achieved/exceed.
Agreater focus by POL on both sides of the accounts ie not just focused on income but aiso losses.
Greater ownership of cash and stock by all SPMRs so to try to cut down on careless errors/better
accounting for the stock and cash issue to them (I know Geoff May has advocated on several
occasions SPMRs should actually own the cash and stock as with any other franchise type
arrangement).
The losses and gains policy needs to be reviewed completely to reflect current and revised
approaches to the issue of debt.
We need to focus our effort in two ways (i) quick wins on recovery and (ii) preventing debt situation
deteriorating further.
Who would we need to involve to work on debt management:
- P&BA
- Finance particularly the MI team
- Network Directorate (Outlet Support, Anna Mailey's/Julie Thomas's team, Richard Barker and Adele
Henderson's team, NFSP liaison team)
- Possibly Legal Services, HRSC
- Cash Management potentially
- Change team to manage introduction of any changes
- NBSC for changes to scripts of operators where appropriate
POL00105418
POL00105418
- NFSP at some stage
lam not sure if there could be system work involved with may need IT involvement.
In addition at some stage the product proposals prepared by Marketing should include something on
potential errors that can occur with transactions and how this is built into the overall product
proposition.
Not sure if this fits the bill of radical but hopefully it will provide a start point.
Regards
John
John Breeden
National Contract Manager North
Outlet Support Team
Network Directorate
Post Office Limited
Mobile:
External
Post Office Limited
Registered in England and Wales Number: 2154540 Registered Office 80-86 Old Street London EC1V
ONN
The Post Office and the Post Office symbol are registered trade marks of Post Office Limited in the UK
and other countries.
This email and any attachments are confidential and intended for the addressee only. If you are not
the named recipient, you must not use, disclose, reproduce, copy or distribute the contents of this
communication.
If you have received this in error, please contact the sender and then delete this email from your
system.