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POST OFFICE LIMITED
BOARD REPORT
Title: IDG Update Meeting Date: I 12" July 2022
. Jo Welch, IDG Secretariat . Dan Zinner, Inquiry Improvement
acini Dan Zinner, IDG Chair Bpaneare Delivery Chair
Input Sought: Noting
The Board are asked to note:
i. Progress made and priorities for operational, cultural and Horizon improvements as
tracked through the IDG in preparation for the Inquiry.
Previous Governance Oversight
« IDG Updates to Board on 29 May 2022, 3 June 2021, 6 May 2021, 25 March 2021
« IDG updates in CEO Report to Board
Executive Summary
Since the last IDG Board update, we have increased the number of tracked improvements by
1.7% (total of 525 items), all of which are potential detriment issues. Overall 89% of items
are reporting closed, with 65% verified through IA. Of the remaining 56 items IDG is
tracking to complete, over 70% are for CIJ, and of those about half are “Red/Oxblood Red” in
terms of impact, primarily around detriment or aged balances which are managed by HMU.
The priority CIJ areas are around detriment, aged balances and established losses. The
priorty for HIJ is to review work to date, in terms of sustained conformance against the HIJ,
to identify any urgent gaps. In addition, it is hoped that further progress will be made on
remote/privileged access and linkages with Branch Hub (a data reporting suite for self-service
and accessing Branch Hub from a Horizon terminal).
The business is now turning to tracking the impact of improvements made to ensure
continuous improvement and effective implementation of improvements. Thus, most
functions are moving to new ways of working in BAU to support HIJ and CIJ improvements.
Given the sheer number of improvements across CIJ, the Reading Room has a structed
(across 8 themes and 9 CIJ areas) and grouped list of all improvements as a reference guide.
Questions addressed
1. What is the latest position on tracked improvement items since March Board?
2. What CIJ improvements have been recently completed and what is the focus going
forward?
3. What HIJ improvements have been recently completed and what is the focus going
forward?
4. How do we measure and assure sufficient progress is being made and embedded?
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Report
What is the latest position on tracked improvement items since March Board?
5. As last reported to Board on 29 March 2022, IDG was tracking 516 improvement items
(which includes parts/stages of improvements), of which 87% (449 items) had be “closed
as completed” by programmes and 62% (318 items) had been verified through IA.
6. Given significant progress of the tracked list of improvement, most activity has now been
moved into BAU teams’ continuous improvement plans (aligned with our focus on
Postmasters and current investment budgets). As such, only 9 additional items are being
tracked, all are around potential Postmaster Detriment (CIJ).
7. As of 29 June 2022, IDG is reporting 525 total improvement items, of which 89% (469
items) had be “closed as completed” by programmes and 65 % (343 items) of the items
had been verified through IA. This means programmes have completed 20 additional
items in the last 3 months and verified an additional 25 items through IA.
8. Of the remaining 11% of tracked items (56 items) that are not currently completed, 40
are for CIJ and 16 are for HIJ, specifically:
For CIJ (in priority order):
a. Half of all CIJ items are either “Red/Oxblood Red” in terms of impact, all of which fall
into the first three bullets below (except 2 items as noted in the paper).
b. 13 items are for potential Postmaster Detriment. Additional information is found in
the next section on this topic and in Appendix 1.
c. 6 are items related to Aged Balances, with more information in the next section.
d. 1 item on Established Losses is due to complete this summer and more detail can be
found in this report and in the Reading Room on this topic.
e. 6 CIJ items linked to our Cultural Improvement programme to embed a service
mindset across POL, more detail can be found in the next section (1 item is “Red”).
f. 3 items due to complete imminently, pending governance approval, specifically:
Auditor's title; NFSP GFA update completion; Branch Hub onboarding changes.
g. 2 items to be completed in H2: Stock management training; Strategic Partner guide
for “how to run your branch” relevant to specific SPs
h. 8 CIJ items “On Hold” pending funding decisions, all of which are either Branch Hub
or Supply Chain items, which do not cause, or have potential to cause, Postmaster
detriment or significant reputational risk.
i. There is 1 item suggested by Deloitte (“Entire IT Systems landscape review with a
single PM View delivered”) “On Hold” which may have potential to cause harm (“Red”
impact rating) as our systems are not all connected. IDG took a view to keep on
hold given amount of IT change currently and lack of funding to execute.
For HI):
j. All of the HIJ items remaining are rated “Red” in terms of impact, although these
have been self-rated by the team and are under review at the moment.
k. All but one are showing a “Red” status or delayed status.
I. The team is in process of reviewing the plan for future work, in agreement with the
Operations (in terms of change capacity), Commercial (in terms of product planning)
and Change (in terms of available investment spend).
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What CIJ improvements have been recently completed and what is the focus going forward?
Postmaster Detriment
9. As a result of 1) GLO training, greater awareness of possible detriment caused by
processes, 2) improvements being delivered and 3) focus from IDG, various parts of the
business have raised to IDG and HMU possible areas of potential postmaster detriment.
10. The total possible and known detriment list of 13 items (with one of them just awaiting
final assurance given it has been completed), does not include suspension payments, the
strategy of which has been completed and is almost complete in terms of all data.
11. Suspension payment detriment is now awaiting shareholder funding approval and once
complete, HMU will start sending letters out to affected postmasters to make payments.
A list_of the current 13 items being tracked by IDG can be found in Appendix 1. While
13. It is the responsibility of the business to ensure improvements are made to any product
or process that legally causes detriment if it has not already done so.
14. The HM team is responsible for remedying any detriment. This could include a wider
disclosure statement, via the POL website, inviting all current and former Postmasters to
contact POL should they wish to dispute any shortfall due to an identified detriment.
15. The IDG will continue to monitor the progress of all potential detriment areas and these
will be reported back in detail via the HM team.
Aged Balances
16. Most recent focus on Aged Balances has been to understand the legal position and options
available to POL. A paper has beed circulated through appropriate governance forums
(HMC, GE, HRC) to approve a course of action, before creating a business case with the
shareholder to ensure appropriate support as required.
17. The simple issue at hand is about recovery of any in-process outstanding/aged balance.
POL cannot make recoveries on outstanding balances without proper disclosure and
investigation. As such, POL must cease all recovery until a full investigation takes place.
18. Consideration was given to differentiate between former and current postmasters as well
as for previous payments collected. All issues and options are considered in a separate
paper within appropriate governance forums, while being tracked by the IDG.
19. There are ~£22m! in outstanding balances, relating to ~1,800 current and former
Postmasters (of which there are ~182? are currently making payment), for any balance
before April 2021 (when the Review/Dispute button was introduced).
Established Losses
20. Recovering an established loss, after a full investigation, is a significant step forward in
moving forward from CIJ. Before doing so, we must be fully CIJ/HIJ conformant. Thus
we are not in a position yet to recover established losses through civil proceedings.
‘this value is an estimate and will fluctuate depending on Postmaster repayments made; further analysis required to determine
exact amount
*this value is not static and will fluctuate daily depending on Postmaster repayments.
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21. We are, however, required to
(according to NRF). This process is happening now and should be complete this summer.
Please see Reading Room materials on established losses for more process details.
Cultural Improvements
22. In addition to these 3 priorities, maintaining momentum and innovation in our overall,
multi-year cultural change programme is critical.
23. In the last 3 months, the team has been focusing on expanding our highly successful
training programmes including: 1) enrolling all GE members and 25 High Potential
colleagues in Leading to Serve. Phase 2 of this programme is about to begin (this is the
only culture “Red” impact item); 2) increasing Supply Chain Service Mindset completion
rate to 85% (from 60% in March); 3) completing 4 Service Mindset courses for HMU,
given their interface with current and former Postmasters.
24. In addition to targeted interventions, the team reached our entire colleague population
through the April 2022 Colleague Conference. The purpose was to align colleagues around
strategic priorities and relaunch POL’s Ways of Working.
25. Most importantly, a recognition programme for PO colleagues was introduced to recognise
positive behaviours and deeply embed our values into the organization through thank you
cards, recognition boards at all locations, lanyards, etc.
26. These sorts of cultural interventions will continue for the next 12 months to further embed
the Ways of Working and needed cultural changes aligned to the CIJ.
What HIJ improvements have been recently completed and what is the focus going forward?
27. As the inquiry approaches, and significant amounts of improvements have been made to
Horizon, the Horizon enviornment, and the overall system (which includes more than just
an IT system), it is important for the team to take stock of what has been accomplished.
As such the current focus is a review of work to date, in terms of sustained conformance
against the HIJ, to identify any urgent gaps.
28. In addition, work is underway to obtain independent assurance on improvements. This
includes updating and finalising the work that NRF started a year ago as well as obtaining
independent assurance on specific areas within the Fujitsu (FJ) enviornment.
29. We have informed FJ that we are in process of creating the Terms of Reference for such
an assurance project, specifically focusing on 2 areas: remote/privileged access and
transactional integrity. Work is underway to select a 3 party assurance partner using a
PCR compliant framework. FJ have yet accept the proposed scope of the audit activity or
indicate resourcing implications to execute the work.
30. At the last IDG Board update, we reported the main areas to progress were: BranchHub
on Horizon; AppDynamics software pilot to monitor each branch’s Horizon performance;
a branch reporting suite of data available for self-service; and improvements to the testing
process and environment for Horizon changes.
31. The HIJ remediation team have made progress on some items including:
a. Successfully completing the AppDynamics software pilot launched across 107
branches in March 2022, providing the means to better track Horizon counter
performance. Planning now in place to trial the solution more widely across the
branch network as part of POL IT BAU operations subject to a final tool alignment
between Horizon & NBIT and confirmation of investment funding availability.
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b. A National Lottery direct settlement proof of concept launched with 5 Tesco stores in
May, with a further mid-tier QR scan pilot, scheduled to start in July.
c. An additional 5 User and Data Journeys have been completed
d. Additional remediation analysis, with recommendations, completed for both stock and
cash replenishment and for loan and savings account products.
32. Thus, while the team is in process of reviewing the plan for future work (based on priorities
and known funding limitations), it is believed that further progress in some areas already
started can be funded, including:
e. The Branch Reporting Suite: A prototype has already been developed with 250
Postmasters engaged through IT Working Group.
f. Branch Hub on Horizon: Project planning underway for pilots of Branch Hub on
Horizon in August. This will also include enhancing the browser capability on Horizon
so Postmasters can access these support tools more quickly and easily.
g. Remote/Privileged Access: Further implementation of limitations to FJ permissions is
being planned
How do we measure and assure sufficient progress is being made and embedded?
33. As most improvement items have been delivered, the business has been moving to a new
phase of embedding these improvements and ways to track and measure improvements.
34. Over the last 2 Y2 years there has been a consistent drumbeat of communication focused
on operational improvements to Postmasters. It is a challenge to reach 30,000+ people
about improvements made on a consistent basis while being mindful of the competing
priorities for Postmasters, including their main concerns around remuneration.
35. As aresult, a measured and targeted approach to communication is being taken for any
one given topic to ensure a balance. This utilises various tactics (email, video, WhatsApp,
face to face conferences, etc), targeted audience communications and tracks against CIJ
and HIJ issues. The results of this effort (as of May 2022) are shown in Appendix 2.
36. Many of the messages have clearly landed across the network given the positive change
in perception from the January 2022 Postmaster survey, where the top 5 improvements
were in operations and communications.
37. In additional to efforts to increase awareness and consideration of improvements made,
functionally we are in process of setting up numerous operational metrics and dashboards
to constantly monitor that our improvements are being embedded. An example of this is
in Onboarding and Training, where there has been significant scrutiny through the CIJ.
38. The team is now investing in tracking metrics to provide insight on the impact the
improvements are making. This is an early start, but is part of the embedding process of
improvements. For example:
a. The onboarding process, which now regularly takes 5 months, is now measured in 5
phases. Data indicate issues in certain parts of the process (financial assessment and
contract signing), so actions are set up to resolve this.
b. For training, the team are measuring both new starter training confidence levels as
well as the outcomes of subject specific refresher course training to test effectiveness
of the training.
c. Insights into the new ATM balance training course indicated a significantly better
outcome for those who voluntarily took the training course (82% of the trained group
had no TCs in 3 months following training against 50% for control).
d. However, analysis from Lottery refresher course did not indicate an impact on
lowering TCs. Insight indicated that those taking the course were already good
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performers and thus the training team will work with the Area Managers and BSC to
push those with highest TCs to the course and re-measure the impact.
39. However, functional area monitoring alone cannot prevent future issues. Thus, IDG has
supported the development of a GE level Postmaster Support Dashboard, to ensure proper
oversight on key policy and support areas. As Governance is an important improvement
theme, this dashboard will reconcile emerging trends in one place and provide a more
formal escalation route to flag any issues to GE via the commentary sections.
40. The data is based on the 12 postmaster support policy areas: training, onboarding,
complaints, cash management, TCs, account discrepancies, account dispute resolution,
network monitoring and the 4 contract policies (suspensions, reinstatements,
terminations, and decision review outcomes).
41. In addition, it is important to create and update controls to monitor improvement
compliance on a regular basis. A team is in place to map current controls back to the new
processes and risks identified in the postmaster support policies while identifying gaps and
removing controls that do not add value. As an example, originally the investigations
process had 32 controls on a manual spreadsheet. After review and input into ServiceNow,
there are 14 controls mapped to the actual process and risks for that policy.
42. There are currently 34 controls in ServiceNow for 2 areas of 8 postmaster support areas.
A sequenced and resource team are in place to complete this work by the end of this year:
Area Start Review I Training ServiceNow
by attesters by live date
BSC and IRT May 22 Jul 22 29 Jul 22 01 Aug 22
Network Monitoring and I Jul 22 Aug 22 30 Sep 22 01 Oct 22
Support
Postmaster Account SupportI Aug 22 Sep 22 N/A O01 Nov 22
Team
Security Jul 22 Oct 22 30 Nov 22 01 Dec 22
Service & Support Team / I Oct 22 Nov 22 31 Dec 22 01 Jan 22
Knowledge
Audit Support Oct 22 Dec 22 31 Jan 23 01 Feb 23
Branch Reconciliation Team Jan 22 Mar 23 N/A Live
Network Support and I Apr 22 May 22 01 Jul 22 Live
Resolution (Investigations)
Next Steps & Timelines
43. The IDG will continue to track, prioritise and guide improvements to put postmasters at
the heart of our business.
44. The IDG's work is most likely to be relevant to Phases 6 and 7 of the Inquiry. In the event
that the Inquiry requests that a witness attend from POL to give evidence about the IDG’s
work, the Inquiry will first issue a Rule 9 request for a witness statement and, potentially,
subsequently invite the statement maker to give oral evidence.
45. The Inquiry team is engaging with IDG to understand the information captured within the
Master Tracker relating to each improvement and to collate documentation for evidence
of work completed for each improvement recommendation. The Inquiry Team to HSF will
use this information to assist POL’s response to relevant Rule 9 requests concerning the
IDG's work and to facilitate witness preparedness for any related Inquiry attendance.
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Appendix 1
Potential Detriment areas under analysis (not including suspension payments)
Potential Detriment Raised by Raised.on Business Owner —_Legal Stati Quantification Status : (ie packer ea
review!
(1) heuer mee Deloitte ~Feb 21 Mel Fischer Reviewed Quantified - await decision to disclose No —
e ATM Shortfall process Deloitte ~Feb 21 Mel Fischer Reviewed Quantified - await decision to disclose No Complete
e Maintained Error Limits Deloitte Feb21 Colette Meteer/ Reviewed Complete Yes —
(:) Savings Renumeration Mel Fernandes 29/07/2021 Mel Fernandes. Reviewed fropact Gualtied, aaehavonis No 30/06/22
e Counterfeit Sterling NED 17/08/21 a py error ple orth ata No 01/07/22
@ resist ste sciP 11/08/21 SCIP (TBC) Reviewed Sar avisalbnt si tad No 01/07/22
e FX BAU Issue NickBoden 22/02/2022 Nick Boden Sere Qualification - In Progress No 29/07/22
(s) Postal Orders Deloitte/ KPMG 29/08/21 mn pha ardent pe aera No 08/07/22
e Paystation Decite! 9/08/21 TBC Phe Qualification - In Progress No 05/08/22
(10) SmartPost scp 12/04/22 ag ag I er Qualification - In Progress No 12/08/22
@ MoneyGram Denite/ = 2ayney2t TBC Seal Triage Started No 31/08/22
(12) Lasttory tx fecratcn sci oge/2i Sci Rilssalt —— Triage Started No 31/08/22
® Branch Closures scip 12/08/21 sary Russell Pah Triage Started No 31/08/22
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Appendix 2
Total Communication Events by CIJ/HI) topic to Postmasters
cus
(C106/HII9/H1014/HI15 TCs and Disputes
cuz
HID3
Ho1/HD2 [Bbugs, errors, defects
Hos/HD9 I Postmaster access to branch data
cu7 QJ Suspensions
coi Onboarding
Hus Data entry errors
HD7/HD11/HD12/HD13 Remote access
co Audit
cos Terminations
Hox0 I 3rd party data reconciliation
Hus I Access/editing of branch transactions
cus I Loss prevention
o 0 2» % 4 so 6 7 8 9% 10 10 10 1 10 190
Total Communication Events to Postmasters by Month
‘Sum of es
‘Communication
Channel/tactic ~! Events ha
One website 146] I?
Weekly email 143] Jo
Branch Focus 55] I.
Postmaster Conference 26
Postmaster Support Guide as} I
[Standalone email 6} Pe
Letter 5] fio
External media advertising a] I.
[Contract restatement 1 7
Grand Total 398] I san rebmarttay un Jul AugSep Oct Nov Jan Feb Mar Apr May Jun Jul AugSep Oct Nov Declan Feb Mar Apr May
*to Postmasters only 2020 2021 2022
Postmasters recognise improvements to operational processes & support (Jan 2022) ,,
Improvements in priorities hed 5
—
OMMUNICATION =
ARE TOP 5 -
IMPROVEMENT =
—
‘The Horizon user experience
Simpliciy of our products and services
Simplicity of PO systems and processes
‘Communications from PO are open and honest
(Creating new products and services
ISSUES OF ‘The views of Postmasters are listened to and acted on by Senior.
REMUNERATION/
Pea ‘A focus from senior leaders in PO on improving the overall.
AND INNOVATION ‘A focus from senior leaders in PO on improving remuneration,
‘The level of remuneration you receive
f= 1-Noimsroverent 2 3 s4-Neutral #5 96 m7-Sionfcant improvement 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2a Thinking about he prortes highightedin the ast research, to what extent have there been improvements in each ofthe areas Usted inthe last 12 months? ease wove2 1213
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