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POST OFFICE GLO BOARD SUB-COMMITTEE PAPER
NOTING PAPER
Operations and GLO contingency planning
Authors: Nina Trueman, Angela Van Den Bogerd Sponsors: Al Cameron, Debbie Smith, Julie Thomas
Meeting date: 22 October 2019
Executive Summary
Context
This paper covers a comprehensive update of the activities across Operations which
have already been completed since the Common Issues Trial Judgment was received in
March 2019 and those in progress as part of the change activities under Operations and
Retail. It also updates on the contingency planning work completed in readiness for the
Horizon Issues Trial Judgment.
Questions addressed in this report
1. What changes have been made to operational support processes since the
Common Issues Trial Judgment?
2. What further changes are now in progress via the Ops transformation and Agent
Relationship Programmes?
3. What is our level of preparedness ahead of the Horizon Issues Trial Judgment
being received?
Conclusion
1. All processes related to how we support branches, recover losses, manage loss
disputes, suspend and terminate Postmasters have been reviewed to reflect the
outcomes of the Common Issues Judgment.
2. A programme of activity to reduce Transaction Corrections through Horizon screen
changes and further process system and restructure activity across Loss
Prevention and the Branch Support Teams in Chesterfield is now mobilised.
3. Ahead of the Horizon Issues trial judgment, additional monitoring capability to
enable detection of branch impacts, such as closures, is in place. A response plan
is in place to minimise disruption to customers. Materials and a comms strategy to
maintain the confidence of our stakeholders in the event of negative reactions to the
Judgment are ready to be deployed.
Input Sought Input Received
1. The Board is asked to note the 2. Operations team, Retail Sales team,
contents of this paper Horizon Contingency Planning
Programme, Finance
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The Report
What changes have been made to operational and support processes to reflect
the Common Issues Trial Judgment?
1. Simpler Branch training and engagement
2. Transaction Correction wording changed and under strict quality control to
ensure these are plain English and correct.
3. Transaction Correction Disputes Team mobilised to help Postmasters if they do
not agree with a Transaction Correction following explanation from the Branch
Reconciliation Team.
4. Tier 2 Branch Support implemented with dedicated Case Handlers helping
Postmasters by investigating discrepancies if the Tier 1 call is unable to identify the
cause. (By September, 575 cases valued at circa £1m have been resolved - 99%
success rate).
5. Loss Prevention Case Workers - new team mobilised in August to administer
the end to end audit process, which will ensure accurate, consolidated information
is maintained at an individual case level. This team will take on the responsibility
of scheduling audits which will result in less lead time between a risk being
identified and the branch being audited.
6. Horizon Knowledge Based Faults (KBFs) formerly known as KELs - joint work
with IT and Fujitsu completed to separate known faults from Knowledge Based
Articles (KBA) and Knowledge Based Information (KBI).
7. KBF Process -— the process for identifying faults has been formalised and the
(current) 11 known faults have been documented and uploaded to Dynamics and
the Branch Insights Tool for reference by the Branch Support, Loss Prevention and
Area Manager teams if a Postmaster reports a discrepancy.
8. Branch Insight Tool - developed and launched to all Area Managers and all
branch support teams. This tool is designed to be shared with Postmasters and
gives detailed Operational performance information to enable supportive
discussions around Operations conformance.
9. End to end process review - all data, decisions, letters, processes involved in
supporting branches, identifying losses, supporting recovery of discrepancies,
moving into loss dispute, recovery, suspensions and terminations have been
reviewed:-
10. Audit Rationale Document - produced for every audit and shared with the
branch operator at the start of each audit to improve the transparency of the
rationale for the audit
11. Audit opening and closing scripts - have been produced, and used by auditors,
to ensure a consistent conversations the branch operator at the start and end of
each audit
12. Audit attendance - all audits now have a minimum of two auditors to ensure
consistency and to allow double checking of counting between auditors and so
minimise mistakes
13. New telephone quality assurance process to gain feedback from branch
operators on their audit experience
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14.Weekly management of suspension cases and cases involving Legal
introduced to improve visibility of suspension cases and improve the speed of
resolutions — cases now reduced to 6-8 per month from typically 15-18.
15. Contract management restructured to create one point of decision making for
all suspension, termination and reinstatement decisions to improve consistency
and speed.
16. Correspondence reviewed with Legal and Comms - ensuring legal
compliance, but supportive tone of voice. This includes remedy letters sent by
Contract Advisors and discrepancy letters sent by Loss Recovery.
17. Loss Recovery call monitoring introduced to ensure quality and consistency of
telephone calls
18. PACE interviews -— no longer carried out by Security given that prosecution
processes are on hold
19. Increased support and Operation Torch visits - are being carried out by the
Security teams to focus on helping operators prevent their exposure to increasing
retail crime and to drive security compliance
20. Culpability reviews - processes for operator culpability (e.g. sleight of hand)
have been reviewed to ensure consistency and a focus on support for the branch
operator
What further changes are now in progress via the Operation Transformation &
Agent Relationship Programmes?
21. Hothousing
22. Transaction Corrections and Horizon improvements - business case approved
for phase 1 and 2 along with prove case for phase 3.
Phase 1 and 2:
e Banking TCs - changes to reduce ability to make mistakes (Nov 19)
e Bureau TCs — changes to Bureau manual booking, selling and buying screens
and pre-order click & collect. (Jan 20)
e Cash rem from branch improvements (Jan 20)
Phase 3:
e Debit card TCs - delivery of refund to debit card functionality (Jan and Mar
20)
e Lottery TCs - Camelot integration for Lottery prizes (Mar 20)
e Paystation TCs -automation changes (Mar 20)
e ATM TCs - ATM simplification (Mar 20)
23. Continuous Improvement - approach proposed within Operations
Transformation now being adopted; shared accountability to feed the backlog of
improvements between Retail, Operations and IT. Annual budget (ASM) to be
ringfenced to fund a dedicated Fujitsu improvement team.
24. Loss Prevention Transformation — business case submitted to continue the
modernisation of this new function with predictive data modelling and case
management allowing earlier detection, fewer losses and fewer suspensions: -
e Introducing a Case Management system linking with other teams outside
of LP means we can work through cases clearly and consistently from incident
to recovery, to understand true workload, improve inefficiencies to close
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cases quicker. The Postmaster will have a much better experience as we can
implement support interventions sooner, and meet our obligation of good
faith and transparency. This will also enable case progress to be made visible
to the Area Manager teams and other internal audiences so that local
stakeholders can be managed and updated as appropriate.
e Basic SAP Improvements such as ageing the losses correctly and
automating legally compliant letters means we will be able to recommence
our loss recovery activity whilst doing this confidently within the findings of
the GLO.
e New approach to Loss Prevention using predictive data modelling will
create a range of responses to risk. These will range from desk-based audit
calls for return of cash to blocking user access to Horizon to implement more
control, with physical audit and suspension becoming the exception rather
than the norm. Initial business case submitted Oct to include a prove phase,
expected to lead to a full business case in Q4.
25. Business Resilience and Change (BR&C) — business case and planning
underway to establish a Business Resilience and Change gateway within
Operations. This will incorporate the existing Network Gateway Team with an
expanded remit. The team will continue to be the forward looking ‘voice of the
Postmaster’ for all changes impacting the branch network. The expanded remit is
to take ownership on impact assessing back-office systems, processes and 3rd
party supplier process changes. It will also identify and coordinate the early
resolution of issues that could impact branches as well as manage operational
branch communication. The Knowledge Based Fault process and ownership of
future Horizon improvements will sit in this team with joint objectives across
Network Operations and IT Operations.
26. Branch Support TOM - prove case to land in Q4 with a full business case as part
of OE to be developed during Q4. This describes a support centre which is digital
first, but skilled to support in the right way, at the right time, driven by data. This
is inter-connected with Branch Hub, Loss Prevention and improvements to Horizon
to design out mistakes
What is our level of preparedness ahead of the Horizon Issues Trial Judgment
being received?
27. Preparedness activities ahead of the Horizon Trial Judgment being received include
the scope of work carried out since June 2019. The strategy adopted by the wider
Post Office team is to build organisational ‘readiness’ and minimise business
disruption, based upon a worst case Judgment being received. Though not all are
expected to materialise, the potential and most severe immediate business impacts
of a worst case scenario Judgment are set out at Appendix 1, along with an
indication of likelihood.
28.A set of minimum requirements, or capabilities, which needed to be in place in order
for Post Office to be ‘ready’ to respond to a potential adverse judgment were defined
as:
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e¢ To have a monitoring capability in place, in order to quickly identify
impacts across the network.
Capability is now in place and rehearsed to monitor and report twice daily on
the following: unplanned branch closures, postmaster sentiment, cash
declarations / branch conformance, media articles, customer complaints, NBSC
call volumes, relationship/client reaction, postmaster resignations.
¢ To have operational response processes in place that will minimise any
disruption to customer service, with a particular focus on vulnerable
customers.
New processes have been designed or existing response processes enhanced
to ensure operational impacts can be managed coherently. For example, a
virtual team has been established to coordinate and mobilise Comms, Supply
Chain, Area Managers and Branch Support - should branches refuse to open.
Where additional resource may be required (e.g. Branch Support Centre), surge
resourcing plans are in place.
Broader and longer term business continuity needs have been identified, with
plans in place to pilot and build resilience e.g. through trialling ‘pop up’ post
offices and having in place 5 additional mobile vans - both my mid-November.
e To have a rapid response team capability in place and rehearsed, able
to implement operational response measures and react to a rapidly
evolving and unpredictable situation.
A cross-functional strategic Crisis Management Team is stood up, rehearsed
and able to respond to a range of scenarios as well as manage more complex
strategic challenges, with the appropriate MI feeds and escalation points to the
GE.
e To have a communication strategy in place, designed to protect
stakeholder confidence in the Post Office.
A comprehensive communications plan, which is built up from 30 pieces of
collateral and briefing materials, varied by audience and channel, has been
developed. WBD and HSF have both reviewed all associated material as have
Lexington; ensuring the tone is appropriate and delivers to our strategic
objectives, which are as follows.
1. Avoid a hostile confrontation with the Judge.
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2. Protect the overall reputation of the Post Office and the integrity of its
relationship with subpostmasters.
3. Reassure and maintain confidence of key stakeholder groups in the overall
reliability of Horizon, the PO network, products and services.
4. Proactively make clear that the Post Office is addressing the concerns of
key stakeholders and the Court.
5. Minimise any media and political fallout arising from the Judgment.
6. Quickly move the story from criticisms of historic practices to
communicating forward-looking proposition to postmasters designed to
improve their commercial and day-to-lives.
29. The initial focus of the contingency planning has been to equip the business to
respond to the worst case scenario (a high level view of how the Post Office will
respond to in such circumstances is included at Appendix 2), recognising that
currently there is no alternative at scale to the Horizon system, nor for example, a
temporary paper based system which would be acceptable to regulators such as the
FCA. The focus has now extended to considering a more moderate and what we
believe to be realistic response from postmasters i.e. we expect the majority of
postmasters to want to continue to provide services to their customers and run
successful businesses. They may however be concerned by the Judgment and turn
to Post Office for explanations, guidance and reassurance on what Post Office will do
to support them should they encounter any issues when using the Horizon system.
Key materials which have been or are being prepared in order to maintain
confidence, contain the judgment and reassure Postmasters and other stakeholders
are included at Appendix 3.
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1.
Worst Case Scenario
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A worst-case scenario was identified through a series of workshops with the wider business (including IT, Legal, Ops and
retail). The most severe of these impacts are captured below:
1.
Issue ‘Grouping’ (There are 15 “Horizon Issues” to be decided at
trial. These can be grouped under 4 categories) along with extracts
from the Claimants’ closing submissions
The reliability of Horizon and the extent to which Horizon
was the root cause of shortfalls in branches: It is clear that
bugs, errors and defects have caused discrepancies and shortfalls
in branch accounts and undermine the reliability of Horizon to
accurately process and record transactions.
The al
-y for Post Office and or Fujitsu to access, edit or
delete transaction data recorded in branches: Remote Access the Horizon system are not fit for
is an ‘open door’. Post Office and or Fujitsu had a number of
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Stakeholder inference
Technical: IT system is not fit
for purpose today to the extent
that Post Office and postmasters
I cannot rely on accuracy of branch
accounts past and present.
Procedural: Process governing
purpose and serious concerns
different powerful tools and roles which had the potential to insert, remain over the use of remote
edit and delete transactional data. Roles were not properly
controlled.
Please note that groupings 3 & 4 issues were designed to be
uncontroversial factual questions about how Horizon conducts
reconciliations and processes transaction corrections. The issues to
be addressed are purely factual and should not invite comment on
adequacy or sufficiency.
Reconciliation and Transaction Corrections - How Horizon
compares its own transaction data against other data
sources: There is no dispute between respective experts on these
issues, though the Judge could find that over 100,000 TCs each
year indicates that there are problems with Horizon or Post
Office’s reconciliation Process.
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access.
Cultural: Post Office’s
relationships with, or conduct
towards, postmasters - or wider
culture of organisation and
leadership - is not acceptable.
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The Potential and most severe immediate
1.
4,
. Calls for or enforced
business impacts
Coordinated or widespread branch closures
impacting customers [likelihood thought
to be low].
immediate legal,
operational, or governance reaction (e.g.
settlement, independent inquiries etc)
elihood thought to be medium/
high}.
. Significant increase in postmaster queries,
questions and claims into branch support
centre [likelihood thought to be high].
Retail partners refuse to sell products or
operate Post Offices. Commercial clients
seek to terminate contracts [likelihood
thought to be low].
. Prolonged top tier negative media coverage
extending beyond initial news moment to
human interest stories [likelihood
thought to be low/medium]
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4. Information available to Post Office versus that available to
Postmasters:
Horizon did not, in general, alert Postmasters to any significant
bugs or other defects in the Horizon System.
Post Office had access to data and systems which Postmasters did
not. Some causes for shortfalls would be difficult or impossible to
identify from the reports or transaction data available to
Postmasters with such identification requiring information and co-
operation from Post Office and or Fujitsu.
There is no functionality within Horizon to raise disputes. These
are done via the helpline and ‘settling centrally’
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2. Response Plan
The Response Plan is a live document detailing how Post Office will detect, mitigate and respond to immediate business impacts
with the processes upon which it is reliant, embedded within it. The table below provides an aggregated view of how Post Office
will respond to the most significant potential impacts which could occur across the network following receipt of an adverse
Judgment, along with our view of their likelihood.
T
Impact I How will we detect this? Key responses Key communication-based responses
I
Ll
Coordinated or I Monitor HORice log-ins If closed branch is located near to « Inform customers through social media/email
widespread branch Ie Supply chain reports alternative branches/services: teams to redirect them to nearest available
closures impacting Ie Area Manager reports « Redirect customers to nearest branch services
customers Ie NBSC reports (hiring taxis / minibuses if required) and I « Area managers to engage postmasters to
I Customer complaints team update Post Office website so customers determine length of closure expected
I reports know which post offices are open (temporary or long-term) and request re-
I « Inform supply chain to increase cash opening
I This data is compiled into a orders to nearby branches who remain
I single report, including open and may receive increase in footfall
I baseline unplanned branch
I closures and removing If closed branch has no Post Office branch
I planned or scheduled branch — (or Payzone outlet for bill payments) within
closures. 3 miles but is nearby to competitors:
« Redirect customers to alternative
providers/competitors
If closed branch is the only branch/service
within 3 miles:
« Consider deployment of pop-up post
office (where available) to region in
order to provide continuity of service to
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I vulnerable customers for SGEIs
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How will we detect this?
Impact
Calls for or enforced
immediate legal,
operational, or
governance reaction
(e.g. settlement,
independent inquiries
etc).
« Media coverage and/or
demands from key
stakeholders etc
requesting immediate .
settlement / Inquiry
Judge makes comment on
specific bugs, known errors
or technical issues
.
Significant increase in
postmaster queries,
questions and claims
into branch support
centre.
NBSC call volumes
Area Manager - sentiment
monitoring and queries
Reti
il partners refuse Relationship manager .
alerts RRT / GE
« Corporate affairs
« Communications team
to sell products or
operate Post Offices.
Commercial clients I
terminate contracts.
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Key responses
Consider deployment of vans (where
available) if location is within distance of
current van routes
Legal team have separate approach to
manage requests to settle / historic
claims
IT response team set-up to respond to,
escalate and fix specific technical
challenges that may be raised in
Judgment. Any issue will automatically be
raised as P1 and escalated to Fujitsu
IT Team to have reviewed all processes
to ensure they are appropriately
documented, including the ‘bug’
identification, escalation and
communication process and pro- active
scanning for issues process.
NBSC surge resource plan invoked to
increase tier 1 headcount by a maximum
of c.30 people. This will mean more
NBSC call handlers can manager tier 2
calls
Area managers are equipped with
information regarding Horizon
troubleshooting if Postmasters have
concerns on reconciling. This will reduce
the burden on NBSC as Postmasters can
use the guide to self-diagnose
Legal team have specific response
process to address contractual issues
raised by this scenario
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Key communication-based responses
« Core response communication playbook will be
used to defend Horizon and remind
stakeholders of why Horizon fundamentally
does work
« ‘New Normal’ messaging to be used to
demonstrate the positive and tangible changes
being made by the business
Areas managers will escalate challenging
questions/queries to the comms team for a
formal response
Area managers equipped to reassure
postmasters on Horizon
NBSC equipped to reassure and
manage/triage queries from postmasters
Relationship managers and GE to be equipped
with Horizon defence messaging detailing the
accuracy of the specific reconciliation process
with each commercial partner.
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Impact How will we detect this? Key responses Key communication-based responses
« If required, branch closure response Long-term strategic engagement required to
process will be invoked to provide manage commercial partner/client
continuity of services where required expectations and future relationship with Post
Office
Prolonged top tier Corporate affairs * Comms team to continue to monitor and
All colleague comms to provide reassurance
Appropriate spokesperson used.
Response will focus on strategy for people to
‘ “maintain confidence” in the Post Office
New Normal’ messaging to be used to
highlight the major changes underway at the
Post Office
negative media
coverage extending
beyond initial news
I Communication team manage story.
/
moment to human I
Il
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interest stories.
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