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POST OFFICE RESPONSE TO WESTMINSTER HALL DEBATE
17 DECEMBER 2014
COMPLAINT AND MEDIATION SCHEME
January 2015
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During the Course-ofthe-WH debate on 17 December a number of statements and
allegations/statements were made by the-MPs-who-participated, many of which were
serious in nature, were-incorrect or did not provide the full context. Rest Office dees not
efthedebate-was-suchthat This note sets out the Post Office considers itnecessaryto-set
eutthe its response tethe criticismistevelled atit.
BACKGROUND TO THE COMPLAINT AND MEDIATION SCHEME
The Complaint Review and Mediation Scheme (the Scheme) was established to help resolve
the concerns of Subpostmasters regarding the Horizon system and other associated issues.
Post Office has been determined to ensure that Horizon and its associated processes are
fair, effective and reliable, and that Subpostmasters can have confidence in the system. It is
in its interests to do so, with 78,000 people using the system to process six million
transactions for customers every working day.
In some instances, however, Subpostmasters alleged that Post Office and Horizon had not
met these standards. To address these concerns, Post Office appointed independent
forensic accountants, Second Sight, to investigate.
In June 2012, in collaboration with the Justice for Subpostmasters Alliance (JFSA) and a group
of MPs led by the Rt Hon James Arbuthnot MP, Post Office established an Inquiry into
Horizon. Second Sight was appointed to lead this Inquiry and published their Interim Report
on 13 July 2013, having worked with a number of Subpostmasters for over 12 months. A
copy of Second Sight's interim report is available at http://www.postoffice.co.uk/post-office-
statement-horizon
Post Office’s response to Second Sight’s Report was to establish the Scheme so that any
individual SSubpostmasters who had concerns could raise them directly with Post Office.
The Scheme was developed jointly by Post Office, Second Sight and the JFSA as the way of
continuing the investigation that Second Sight had started into individual cases. It also and-
allowiaged any sprarsSubpostmasters with a complaint to make an application to the
Scheme with a view to finatly+bringing this matter to a close.
The Scheme was open to both serving and former Subpostmasters as well as counter clerks
employed by Post Office, who believed they had suffered a loss or been treated unfairly as a
result of the Horizon system or any associated issues.
The Scheme is supervised by a Working Group comprising of representatives from Post
Office, Second Sight and the JFSA. The Working Group's role is to ensure the Scheme is run in
a fair and efficient manner. It is also to be involved in making decisions on how particular
cases should be managed through the Scheme. To ensure its impartiality, the Working Group
has an independent Chair, Sir Anthony Hooper.
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HOW CASES PROGRESS THROUGH THE SCHEME
The starting point for the Scheme was for Subpostmasters to submit details of their case to
19 I Second Sight as part of an initial application process. The Working Group; make a
recommendation as to whether the case should be investigated.
On acceptance into the Scheme Applicants were given the opportunity to apply for a funding
contribution of £1,500 +VAT so that they could appoint a professional advisor to assist with
setting out the detail of their complaint. Having done so, their detailed complaint was
passed to the Post Office for investigation.
When the Post Office has completed its investigation, it is passed, together with all
supporting documents, to Second Sight to review and complete a draft report which includes
a preliminary recommendation to the Working Group on suitability for mediation. The
applicant is provided with the Post Office and second Sight reports to comment on before SS
complete a final report which is considered by the Working Group to decide whether it
should be recommended for mediation.
Cases where mediation is recommended are passed to the Centre for Effective Dispute
Resolution (CEDR), the independent organisation providing mediation. It is then a matter for
the parties to decide whether they wish to mediate. This is consistent with the process set
out in the original documentation and agreed by the Working Group when it was
established.
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SCHEME STATISTICS
During the debate, the Minister referred to a letter from the Working Group Chair, Sir
Anthony Hooper, setting out the progress of cases within the Scheme so far. This letter has
subsequently been placed in the Library of the House.
In Sir Anthony’s letter he appended a table of statistics setting out how the Working Group
was progressing its consideration of cases. This is set out below.
Case progress as at 12 December 2014.
Applications to the Scheme 150
Applications rejected (ineligible) 4
Cases resolved prior to entry into the Scheme 10
Case resolved during investigation 2
Cases awaiting Working Group recommendation pending further information/review I 23
by either Post Office or Second Sight
Cases recommended for mediation by the Working Group 24
Cases passed to CEDR to arrange mediation 20
Cases not recommended for mediation by the Working Group 2
Cases mediated d
Cases where Post Office declined to mediate 2
Cases resolved prior to the mediation meeting 2
Cases with CEDR awaiting mediation (of which 3 were scheduled to take place 9
before Christmas)
Cases remaining in the Scheme 110
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QUESTIONS RAISED IN THE DEBATE
Post Office cannot and will not comment publicly on individual cases within the Scheme
because applicants are assured of confidentiality under the terms of the Scheme and in any
event Post Office cannot and would not make public statements which discloses personal
information about individuals without their consent or attempt to subvert the Scheme
through, in effect, public mediation or adjudication in the absence of full disclosure of the
facts and proper process. It is hard to see how cases can be successfully resolved under such
circumstances.
Post Office has remained completely committed to its responsibilities to the Scheme and all
its applicants by adhering to confidentiality, including in the face of provocation when others
have chosen not to do so and revealed selective information, presumably to exert pressure
on the company.
21 I However, Right: 4 dH ble-Members made a number of comments and
asked a number of questions during the debate that did not relate to specific cases. These
are addressed below.
1. Post Office’s Approach to the Scheme
1.1. During the debate, the scope of the Complaint and Mediation Scheme and Post Office’s
approach to it were called into question. The Scheme was described as a “sham” and
Post Office has been accused of showing bad faith to Members of Parliament and the
Scheme’s applicants. Post Office rejects both entirely.
1.2. The Scheme’s overall objective is to try to achieve the mutual and final resolution of
individual Applicants’ specific concerns about Horizon and related issues. The Scheme is
wider than just the software involved. This encompasses, as recorded in Second Sight’s
interim report, the following:
“Horizon relates to the entire application. This encompasses the software, both
bespoke and software packages, the computer hardware and communications
equipment installed in Branch and the central data centres. It includes the software
used to control and monitor the systems. In addition, ....... testing and training systems
are also referred to as Horizon”
1.3. Post Office has gone to great lengths to establish the facts including:
. instigating an independent review of the Horizon System by Second Sight;
e subsequently establishing a complaint review and mediation scheme in
collaboration with JFSA and Second Sight;
. setting up and funding a Working Group to oversee the Scheme, with an
independent Chair — Sir Anthony Hooper — and JFSA as members;
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. providing funding for scheme applicants to obtain professional advice in building
their cases against Post Office; and
. re-investigating each and every case in full and subjecting this to external
review by Second Sight.
22 I 1.4. To date, and after two and half years of investigation and independent [some text is
missing here] we have found no evidence, nor has any been advanced by either an
Applicant or Second Sight, of faults with the Horizon system. This offers welcome
reassurance to everyone who works in the Post Office Network, all of our customers and
our partners and the millions of people who support and depend on the Post Office.
1.5. Post Office has completed its investigation of nearly all cases within the Scheme. The
remaining cases are being treated with the same rigorous approach. Each and every one
is being considered on its facts. Post Office continues to act in good faith responding to
the questioning of the integrity of the system which millions of people rely on every day.
It has always been Post Office’s position, which is why we initiated the independent
review and the Scheme, that if there was a problem, we wanted to find it and be able to
act on it. However, just as it would be wholly wrong to fail to respond to any evidence
of flaws in Horizon, Post Office cannot be expected to ignore clear evidence that directly
contradicts accusations made.
1.6. It has been suggested that the Scheme ought to encompass issues beyond those set out
above, including the subpostmasters’ contract. It is not, and never has been part of the
scope of the Scheme and Post office cannot allow its scope to be extended
23 I retrospectively in an attempt to find alternative issues simply because no evidence of
flaws with the Horizon system have been found.
1.7. It was also suggested in debate that Second Sight had told an MP that “...in its view, a
24 person would have to be an economic and legal illiterate to be willing to sign it[the_
contract]”. Aside from the fact that Second Sight are engaged to provide impartial
advice to the Working Group and have neither the mandate or expertise to make such a
judgement, such a suggestion does a huge disservice to the thousands of hardworking
diligent subpostmasters who are the lifeblood of the network and are synonymous with
what makes the Post Office so vital to communities and who operate successfully within
the terms of the contract.
1.8. The terms of the subpostmasters’ contract are broadly similar to those used in
25 franchising arrangements by other organisations across the UK and reflect the basis on
which Post Office and thousands of sub-postmasters have successfully conducted
business for decades. The terms of the sub-postmaster contract are drawn up jointly by
the Post Office and the National Federation of Sub-postmasters, which represents the
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1.9.
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majority — 80% - of our independent agents. Sub-postmasters are independent business
people, with a similar position to franchisees and therefore may obtain legal advice as
they see fit on any aspect of running their business, including prior to entering into a
contract with Post Office.
The Subpostmasters’ contracts do not make them responsible for all losses at their
branches. The terms of the contract are broadly similar to those used in franchising
arrangements across the UK and reflect the basis on which Post Office and thousands of
subpostmasters have successfully conducted business for decades. The contract
provides for subpostmasters to retain any surpluses. Their responsibility for losses is
limited to circumstances in which correct procedures have not been followed or that
involve carelessness, negligence or criminal action by them or their staff.
2. Post Office is Operating in Secret
2.1,
2.2.
2.3.
During the debate there was criticism was-expressed of Post Office’s approach to the
Working Group, operating in secret. There has also been criticism of Post Office’s
approach to mediation itself. Post Office believes that these criticisms are unfounded
and based on a false premise.
From the outset the Scheme and the work of the Working Group was intended to be
confidential. The Scheme documentation made clear to applicants that they and Post
Office must endeavour to keep details of their case confidential and that all matters
discussed in the actual mediation will be strictly confidential. This is because the cases
involve sensitive and personal information and, to maintain subpostmasters’ privacy,
that cannot be discussed or made public. However, that confidentiality is balanced by
the fact that that Scheme was designed to be overseen by Working Group with an
independent Chair.
In addition, the confidentiality of cases mediated as part of this Scheme is common to all
mediations, not just this Scheme. The Centre for Effective Dispute Resolution (CEDR) is
providing the mediation for the Scheme. The arrangements are in line with CEDR's own
Code of Conduct and the European Code of Conduct for Mediators which the Civil
Mediation Council requires all UK providers to observe in order to maintain
accreditation. The reason for appointing an independent and reputable firm of
mediation experts was specifically to ensure that the mediations are undertaken in line
with best practice. As part of the mediation process, offered by CEDR and accepted by
the Working Group the parties — Post Office being one — are required to signa
mediation agreement which binds them to confidentiality for very good reason. The
letter from CEDR setting this out was also tabled.
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2.4. Therefore it is wrong to suggest that Post Office is in some way being secretive in
respect of mediations. It is simply respecting the agreement signed on entering
mediation as required by CEDR.
3. Post Office is Using the Working Group to Exclude Cases from Mediation
3.1. During the debate, Post Office was also accused of using the Working Group to exclude
cases from mediation and that exclusion from mediation was to be an exception. Post
Office rejects both claims.
3.2. For the reasons set out above, Post Office is limited in the details that it can share on
the Working Group’s discussions. However, the statistics on page ™ of this document
demonstrate that suggestions that Post office is seeking to exclude 90% of cases from
mediation are wildly inaccurate. In fact, of the 24 cases where the Working Group has
recommended mediation so far, Post Office has declined to mediate just 2 (8%).
3.3. It was never envisaged nor stated that all cases would automatically pass to mediation.
Mediation is the potential second part of the process — the first being re-investigation
and independent external review of each and every case. Post Office considers every
case on its merits. Mediation is a consensual process and designed to get agreement
and compromise. It would be wrong, for example, for Post Office to mediate where no
evidence has been found to suggest that Post Office has any responsibility for a loss in
branch. That is not a matter for compromise.
3.4. Where a case is capable of agreement or compromise, Post Office will mediate and has
already done so in a number of cases.. In doing, Post Office takes a positive approach to
seeking a mutually agreeable resolution. Post Office completely rejects all accusations
of “legal bullying” — the mediation meetings are facilitated by an experienced CEDR
mediator.
3.5. It has also been suggested that Post Office is seeking to exclude all cases involving a
criminal conviction, including where an individual has pleaded guilty whereas the reality
is that Post Office is considering every case on its merits.
3.6. It was made very clear at the start of the scheme that mediation cannot overturn a
conviction. Convictions can only be overturned through court process and indeed
JFSA’s; website advised “Did you have a court finding against you? — If yes, and although this
Scheme will consider that to some degree (READ THE PACK), we, JFSA also recommend that you
should enter a parallel scheme with a firm of criminal lawyers who will look into your case with
a view to consider using the appeals court to overturn the findings against you. ”
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3.7. To date no evidence has been identified by Post Office as part of its reinvestigation or
advanced by Second Sight or applicants to suggest that the convictions of any applicants
in the Scheme are unsafe. If that were to be the case, Post Office would be under a duty
to disclose it. Post Office takes these responsibilities very seriously. Post Office and
indeed has written to everyone who has suggested that they have or have seen
evidence that a conviction is unsafe and asked them to disclose that evidencetoPest-
Office so that it can be acted on. To date no-one has provided that evidence. {tis-
fortunate t theleast that ki bli ts that th:
2 oP
id f fi icti dni jages of justi hilst providing Rest Offi
ith id. toi tigate—It is unacceptable for critics of Post Office and/or the
Scheme to make such allegations without providing Post Office with an opportunity to
investigate the alleged evidence claimed to support those accusations.
3.8. It should be noted that some media reports have suggested that all applicants in the
Scheme have a criminal conviction. This is not the case and such suggestions do the
majority of applicants a considerable disservice.
4. Training and Support for Subpostmasters
4.1. During the debate it was suggested that the training, help and support provided to
subpostmasters was inadequate. Post Office does not agree.
4.2. Thousands of subpostmasters have been operating the Horizon System successfully for
years having received training from Post Office. We provide comprehensive training
which includes classroom and on-site sessions. Follow-up support and visits are also
offered to those who may benefit from them.
4,3. In addition, our helpline is available to support subpostmasters in addressing any
queries, alongside providing a service for technical enquiries. If these are not resolved
quickly, further expertise is available, including visits to Post Offices as necessary.
4.4, It has been alleged that the helpline has advised individuals to adopt certain behaviours
and practices that would go against company policy and even constitute potentially
criminal activity, such as false accounting. There is no evidence to support these
extremely serious allegations — that Post Office has told people to commit a criminal
offence - and Post Office rejects them entirely.
4.5. There are no circumstances capable of justifying committing the criminal offence of
rendering a false account. It is simply not true to suggest, as has been alleged, that any
subpostmaster needed to do this to continue trading. Post Office requires a
subpostmaster, at the end of each month, to physically count the cash in their branch
4.6.
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and record that figure in the branch accounts. So long as this is done the branch may
continue to trade while any discrepancies are investigated. If a subpostmaster or
employee deliberately puts false figures into Horizon this hides the true position from
Post Office. Subpostmasters have control and choice when dealing with discrepancies,
either losses or surpluses, including disputing them.
We always strive to improve our training and support r and have undertaken further
initiatives since the publication of Second Sight’s report in 2013. Post Office created a
new Branch User Forum as a way for subpostmasters and others to raise issues and
insights around business processes, training and support, to feed directly into the
organisation’s thinking at the highest level. One of the tasks for this forum is to review
support processes and training to ensure the meet the standards expected of the Post
Office.
5. Post Office’s approach to prosecution
5.1,
Bids
5.3.
5.4.
During the debate Post Office’s role as prosecutor was questioned. Post Office has no
special powers of prosecution. It has the same rights as every citizen or organisation.
Post Office is responsible for 11,500 branches, providing vital services, for people in
communities everywhere, some of whom are vulnerable. We take these responsibilities
very seriously.
All cases of potentially criminal conduct are thoroughly investigated and decisions about
appropriate courses of action are taken on the facts. Decisions whether or not to
prosecute are taken on a case by case basis. There are numerous checks and balances
before and during the very small number of prosecutions amongst subpostmasters and
employees. Post Office is confident its approach is fair, proportionate and compliant
with legal requirements and it is of course tested in the Courts through cases
themselves.
In deciding whether a case should proceed to criminal prosecution the Post Office must
be satisfied that it meets both of the two stages of the test set out in The Code for
Crown Prosecutors. The first is whether there is sufficient evidence to justify a
prosecution and the second is whether the prosecution would be in the public interest.
Acriminal prosecution will only be pursued by the Post Office if both stages are
satisfied.
Once a decision has been made to prosecute, the Post Office has a duty to disclose the
evidence against the suspect. It has been alleged that Post Office has put pressure on
defendants to plead guilty, sometimes to lesser offences. This is completely untrue.
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Any decision by a defendant to plead guilty would be made after he/she has had the
opportunity to take legal advice and consider the evidence against him/her.
6. Horizon and Remote Access
6.1.
6.2.
6.3.
6.4.
6.5.
6.6.
During the debate it was suggested that subpostmasters’ accounts can be amended
remotely, in Horizon, without their or their staff's knowledge.
The Horizon System is operated successfully by thousands of subpostmasters. There
are currently more than 78,000 users of the system and six million transactions are
processed by subpostmasters and Post Office Staff every working day. Investigation and
independent review of the System has continued for two and half years and no
evidence has been found to suggest that Horizon is working anything other than
correctly.
Dur thedebate it tedthat ib. + 4 = +: be dedi:
is eS P
itheutthei. +theirstaffste ded,
ie
This is not possible. There is no functionality in Horizon for either a branch, Post Office
or Fujitsu (suppliers of the Horizon system) to edit, manipulate or remove a transaction
once it has been recorded in a branch’s accounts. It is possible for Fujitsu to view
branch data in order to provide support and conduct maintenance but this does not
allow access to any functionality that could be used to edit branch data. There also is no
evidence of malicious remote tampering. It is not possible to alter transactions
conducted in branch which is why there is simply no evidence that it has ever happened.
Post Office can send transaction acknowledgements (TA) or transaction corrections (TC)
to branches. TAs are used to record transactions that have been processed in branch
through other systems (e.g. the sale of Lottery products on the Camelot terminal) and
TCs to correct errors made by branches. Both TAs and TCs need to be accepted by a
user logged into the branch Horizon terminal before they are recorded in the branch
accounts. They are therefore fully visible to each branch.
It is possible for Fujitsu (but not Post Office) to inject a new transaction manually into a
branch's accounts using the Balancing Transaction Process. This process is used in the
event of an accounting error that cannot be corrected by use of a TA or TC. It is in
accordance with good industry practice to have functionality of this nature in a system
like Horizon. However, its use is very rare and is strictly controlled by Post Office. When
the Balancing Transaction Process is used, it leaves clear and identifiable audit trail and
is done so with full knowledge and consent of the Subpostmaster of the affected
branch.
7. Treatment of Cases Outside the Scheme
7.1.
7.2,
73)
During the debate the issue of late applications and the potential for new cases was
raised.
The Scheme opened to applications on 27 August 2013 and closed on 18" November
2013 in line with the process designed and agreed with JFSA. The Scheme was
advertised within the Post Office Network and on JFSA’s website.
The Scheme is closed to new Applicants but subpostmasters and / or their Member of
Parliament may raise any concerns direct with Post Office at any time and Post Office
will look into the issues raised as part of its normal business. There have been a very
small number of cases raised with Post Office since the Scheme closed. In each case,
Post Office has offered to investigate the individual’s concerns and this has been
generally welcomed.
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