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POST OFFICE GLO BOARD SUB-COMMITTEE PAPER
NOTING PAPER [DRAFT]
Operations and GLO contingency planning
Authors: Nina Trueman, Angela Van Den Bogerd, Amanda Jones Sponsors: Julie Thomas, Ben Foat, Debbie Smith
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?
4. Is the expected spend on GLO in line with expectations?
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, a
response plan to protect service and a comms strategy to maintain the confidence
of our stakeholders are all ready to be deployed.
4. The current estimated GLO spend is £8.9m Opex (of which £1.7m not committed)
and £11.4m Change spend (£3.7m not yet in any business case). See summary at
Appendix 4.
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?
The Branch Support Centre has been restructured to strengthen the support for
branches:
1. Transaction Correction wording changed and under strict quality control to
ensure these are plain English and correct.
2. Transaction Correction Disputes Team mobilised to help Postmasters if they
do not agree with a Transaction Correction following explanation from the Branch
Reconciliation Team.
3. 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).
4. 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.
5. 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).
6. 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.
7. 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.
A new Loss Prevention function has been established to minimise loss to Post Office,
whilst supporting branches against the threat of internal and external losses:
8. 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: -
9. 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
10. 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
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11. 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
12.New telephone quality assurance process to gain feedback from branch
operators on their audit experience
13.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.
14.Contract management restructured to create one point of decision making for
all suspension, termination and reinstatement decisions to improve consistency
and speed.
15. 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.
16.Loss Recovery call monitoring introduced to ensure quality and consistency of
telephone calls
17.PACE interviews - no longer carried out by Security given that prosecution
Processes are on hold
18.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
19.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?
20.Developing Capability (Hothousing) - there has been a step-change in effort
over the last year to better engage and support Postmasters. Capability is being
developed through hot-housing which is live in 220 branches, extending to a
further 45 this month (October). Of a selection of Postmasters surveyed, 79% felt
the relationship between Postmasters and POL was improving.
21. Training - improvements to the on-boarding experience with the new ‘Run a Post
Office’ website and digitised business plan on track to be live this month. New
operational Training modules being developed to address priority areas where we
have balancing issues e.g. lottery and ATMs.
22, Engagement - continued testing of the effectiveness of different engagement
channels. To date, hosted 9 regional business update conference calls, over 100
curry nights, 22 drop-in sessions and over 100 mails workshops across the
country. The sessions, led by Regional Managers and Area Managers, allow
postmasters to openly share concerns, discuss issues and share ideas.
23.Remuneration - various options for increased remuneration have been tested
and modelled with the input of c.50 Postmasters, 6 multiple partners and the
NFSP. Recommendations will be proposed to the Board in a separate paper.
24. 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)
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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)
25. Continuous Improvement of Horizon screens - 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.
26.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
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.
¢ 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.
¢« 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.
27. 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 third
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.
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28.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
* see Appendix 1 for the aims and specific measures for Operations Transformation
What is our level of preparedness ahead of the Horizon Issues Trial Judgment being
received?
30. Preparedness activities ahead of the Horizon Trial Judgment being received include
the scope of work carried out since June 2019 and the strategy adopted by the
wider Post Office team 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 2, along with
an indication of likelihood.
31.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:
¢ 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
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32.
33.
offices and having in place 5 additional mobile vans - both my mid-
November.
¢ 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.
¢ 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.
2. Protect the overall reputation of the Post Office and the integrity of its
relationship with Postmasters.
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.
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 3), 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.
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34,A number of key materials have been or are being prepared in order to maintain
confidence, contain the judgment and reassure Postmasters and other
stakeholders:
« ‘Found vs Not found’: a document which will set out, by each of the 15
issues, what has or, importantly, has not been found by the Judge and what it
does or does not mean for Postmasters, customers, clients, retail partners etc.
The purpose of this document is to inform and equip individuals within the
business, enabling them to ‘contain’ the judgment. This document is to be
produced within 48 hours of receiving the embargoed Judgment, so that it is
ready for ‘Day 1’.
« 29 Bug Summaries: summaries have been produced for each of the 29
discussed in court but will need to be reviewed once the embargoed judgment
is received. It will be possible to make the detail of these bugs available to
postmasters and whether they were branch impacting.
¢ Identifying and fixing ‘bugs’: how branch affecting ‘bugs’ are identified,
escalated and communicated to Postmasters.
« Summary papers have been produced with the intention to make available to
postmasters:
co How the KEL, PEAKS and BIMs knit together and are used to fix errors.
o Remote Access - what we define it as, and the extent it has actually
been used in both Legacy Horizon and Horizon Online.
« One Pager Operator Guides have been produced for:
o Investigating Branch Discrepancies.
o Help with a discrepancy and or TC.
co Troubleshooting /Hints and Tips.
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Appendix 1 — Scope and measures for Operations Transformation
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The Operations Transformation programme is designed to support a partnership of transparency and trust, delivering
efficiencies and protecting Post Office from operational, legal and regulatory risks
&
¥ branch churn
¥ operator complaints
operator satisfaction
Q
U
* digitisation
* online self-service
4 continuous
improvement culture
Appendix 2
We will establish the
appropriate controls. We will
be forward looking and
proactive, anticipating risk and
putting in place necessary
mitigations before it
materialises.
We will make the Branch
Operator Lifecycle as simple
as possible, enabling ongoing
management, controls and
support for our branches. We
will establish and maintain a
reciprocal relationship of
trust and transparency
1. Improving
the experience
of our branch
operators
2. Mitigating
operational,
legal and
regulatory risk
Digital first will underpin
everything that we do
Our business model
services and capabilities
will evolve to become
more digitised and
customer centric with a
supporting continuous
improvement culture
We will establish a
Jean and efficient, low
tisk central support
service to our branch
operators. Our process
improvements will
drive efficiencies both
internally and for our
branch operators
3. Driving cost
reduction and
efficiency
gains
value of losses
¥ operator
suspensions
¥ reputational
risk
a
* cost efficiency
WNBSC cost base
branch
operating costs
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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:
Issue ‘Grouping’ (There are 15 “Horizon Issues” to be decided at trial.
These can be grouped under 4 categories) along with extracts from the
1.
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 ability for Post Office and or Fujitsu to access, edit or
delete transaction data recorded in branches: Remote
Access is an ‘open door’. Post Office and or Fujitsu had a number
of different powerful tools and roles which had the potential to
insert, 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.
Information available to Post Office versus that available
to Postmasters:
Strictly Confidential
Stakeholder inference
Technical: IT system is not fit for
purpose today to the extent that
Post Office and postmasters
cannot rely on accuracy of branch
accounts past and present.
Procedural: Process governing
the Horizon system are not fit for
purpose and serious concerns
remain over the use of remote
access.
Cultural: Post Office’s
relationships with, or conduct
towards, postmasters - or wider
culture of organisation and
leadership - is not acceptable.
Board Intelligence Hub template
. Prolonged
The Potential and most severe
immediate business impacts
. Coordinated or widespread branch closures
impacting customers [likelihood thought
to be low].
. Calls for or enforced immediate legal,
operational, or governance reaction (e.g.
settlement, independent inquiries etc)
[likelihood 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].
top tier negative media
coverage extending beyond initial news
moment to human interest stories
[likelihood thought to be
low/medium]
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‘Horizon did not, in general, alert Postmasters to any significant I = = = ss—<C=~s—‘“‘—<~SO
bugs or other defects in the Horizon System. I I I
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 I
Postmasters with such identification requiring information and co- I I
operation from Post Office and or Fujitsu. I I I
There is no functionality within Horizon to raise disputes. These
are done via the helpline and ‘settling centrally’
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POST OFFICE
Appendix 3
2. Response Plan
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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.
Impact
Coordinated or
widespread branch
closures impacting
customers
Strictly Confidential
How will we detect this?
Monitor HORice log-ins
Supply chain reports
Area Manager reports
NBSC reports
Customer complaints team
reports
This data is compiled into a
single report, including
baseline unplanned branch
closures and removing
planned or scheduled branch
closures.
Key responses
If closed branch is located near to
alternative branches/services:
¢ Redirect customers to nearest branch
(hiring taxis / minibuses if required) and
update Post Office website so customers
know which post offices are open
« Inform supply chain to increase cash
orders to nearby branches who remain
open and may receive increase in footfall
If closed branch has no Post Office branch
(or Payzone outlet for bill payments) within
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
vulnerable customers for SGEIs
« Consider deployment of vans (where
available) if location is within distance of
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Key communication-based responses
« Inform customers through social media/email
teams to redirect them to nearest available
services
I « Area managers to engage postmasters to
determine length of closure expected
(temporary or long-term) and request re-
opening
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¢ current van routes
I Calls for or enforced « Media coverage and/or « Legal team have separate approach to * Core response communication playbook will be
immediate legal, I demands from key manage requests to settle / historic claims} used to defend Horizon and remind
operational, or stakeholders etc « IT response team set-up to respond to, stakeholders of why Horizon fundamentally
governance reaction requesting immediate escalate and fix specific technical does work
(e.g. settlement, I settlement / Inquiry challenges that may be raised in « ‘New Normal’ messaging to be used to
independent inquiries I + Judge makes comment on Judgment. Any issue will automatically be demonstrate the positive and tangible changes
etc). specific bugs, known errors raised as P1 and escalated to Fujitsu being made by the business
or technical issues 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.
Significant increase in I + NBSC call volumes
NBSC surge resource plan invoked to
Areas managers will escalate challenging
postmaster queries, « Area Manager - sentiment increase tier 1 headcount by a maximum questions/queries to the comms team for a
questions and claims monitoring and queries of c.30 people. This will mean more NBSC formal response
into branch support call handlers can manager tier 2 calls « Area managers equipped to reassure
centre. « Area managers are equipped with postmasters on Horizon
information regarding Horizon « NBSC equipped to reassure and manage/triage
troubleshooting if Postmasters have queries from postmasters
concerns on reconciling. This will reduce
the burden on NBSC as Postmasters can
use the guide to self-diagnose
Retail partners refuse I Relationship manager alerts Legal team have specific response process
Relationship managers and GE to be equipped
to sell products or I RRT/ GE to address contractual issues raised by with Horizon defence messaging detailing the
operate Post Offices. « Corporate affairs this scenario accuracy of the specific reconciliation process
Commercial clients « Communications team ¢ If required, branch closure response with each commercial partner.
* Long-term strategic engagement required to
terminate contracts. process will be invoked to provide
I continuity of services where required manage commercial partner/client expectations
and future relationship with Post Office
<a Comms team to continue to monitor and _ All colleague comms to provide reassurance
negative media * Communication team manage story. Appropriate spokesperson used.
coverage extending I Response will focus on strategy for people to
beyond initial news “maintain confidence” in the Post Office
Prolonged top tier ‘© Corporate affairs
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I moment to human
I. New Normal’ messaging to be used to highlight I
_I__the major changes underway at the Post Offi
—
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Appendix 4 - Estimated GLO Spend (11 Oct 2019)
sition 6 1anoiB049 09:59
‘GLO Opex fapporedl 19/20 ‘GLO Oper fpcading spprorall GLO Chvege 19720 GLO Chseae 20721
ana co
FSC reduce T Balog tctormatin Prot Lesa (Lo Previn) MOS 86 Dasige ow Te (Phe 2) 08 otoate Design ie TC (ha PHD) 033
TeDupwes Tem ‘GLO - Water Lecee Texm “6 Design out TOs Place 3 19 Nori tbe
Branch Suppor Tie? ranch Suprt Tier2 me Aginey for cts) ee too Prerition Prove oa 016 toa Loc reeition " we fi
Lose Prevention Phe 2 10
Sime Busine Trina sad Engracment rate Recocation & Diente Tame nc Agee for sae) 3 309
‘Agent Rameerton IT Data Analyt creat ingle poi of ara soos se edeign Ope Branch Supper os 22002019 Redesign Ops=Briach Sport” 20008
‘set Pemenerton“ereeed res for ‘Simpler Biase Mot Hoang
co 3300 Alnc. 9% VAT (ond VAT aduetment for CTs) wos Simple Bune Hot Howring 2s 08 dans ° an
tt
‘Agu Pemacrton Suopended PR 1200 ‘Changs Let (10 coordiatr for Op) 0 Ponte ox toes 310 2
Pose feaecorig) ra BAEC team GLOrerponce 120.
Concdhaey snd ter rcoued rt TH8, vem"
-sapeasdPh saedhSmtterecan 82m beset (Branch Sepport)
Benctite Denette Pcuring (385m sno bene (rom 202 owed)
fits cabing Nis enbing