Tab 10
RC Minutes 25.03.2021 (approved on 08.04.2021)
POST OFFICE LIMITED BOARD MEETING
Strictly Confidential and Subject to Legal Privilege - DO NOT FORWARD
(MINUTES OF A CCRC MEETING OF THE BOARD OF DIRECTORS OF POST OFFICE LIMITED HELD ON THURSDAY 25,
MARCH 2021 AT 20 FINSBURY STREET, LONDON EC2Y 9AQ BY CONFERENCE CALL AT 15.00 HRS*
Present:
Tim Parker Chairman (TP)
Tom Cooper Non-Executive Director (TC)
Zarin Patel Non-Executive Director (2P)
Lisa Harrington Non-Executive Director (LH)
Alisdair Cameron Group Chief Finance Officer (AC)
Nick Read Group Chief Executive (NR)
In attendance:
Veronica Branton Company Secretary (VB)
Ben Foat Group General Counsel (BF)
Richard Taylor Group Corporate Affairs and Communications Director (RT)
Dan Zinner Group Chief Operating Officer (DZ)
‘Amanda Jones Retail and Franchise Network Director (AJ)
Jeff Smyth Group Chief Information Officer (IS)
Gareth Clark Head of IT Transformation Portfolio (6C)
Apologies: Ken McCall, Senior Independent Director, Carla Stent, Non-Executive Director
Agenda Item Action
1. Welcome and Conflicts of Interest
A quorum being present, the Chairman opened the meeting. The Directors declared that
they had no conflicts of interest in the matters to be considered at the meeting in
accordance with the requirements of section 177 of the Companies Act 2006 and the
Company's Articles of Association.
2. Minutes and Matters Arising
The Board APPROVED the minutes of the Board meeting to discuss the CCRC cases held on
18" March 2021.
The Board NOTED the action log.
3. Public Inquiry work update, including:
© Improvement Delivery Group
* Horizon Issues Judgment Update
* Common Issues Judgment Update: Postmaster Journeys Report (Deloitte)
* Draft Postmaster Service Improvement Plan (for CU)
Dan Zinner introduced the update. The draft Deloitte report had been circulated to the
Board last week and we would be finalising the report this week reflecting any comments
from the Board, An update would be provided on our progress in conformance to the
Common Issues (Cl) and Horizon Issues (HU) judgments, We needed to be flexible and
fast in the work we were undertaking but that had to be supported by evidence and many
deadlines were scheduled for May 2021. The more difficult matters were those where we
did not have ownership, for example, where we were reliant on Fujitsu. DZ summarised
the main areas set out in the slide deck:
the operational changes in the Postmaster Service Improvement Plan (PSIP) for the CU
accounted for about 70% of the total
+ participation in the meeting was entirely via Microsoft Teams from participants’ personal addresses. In such circumstances
the Company's Articles of Association (Article 64) require that the location of the meeting be deemed as the chairman's
location. However, it was not deemed appropriate to record personal addresses on the Company record. As such, the
Registered Office is recorded as the meeting location.
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POST OFFICE LIMITED BOARD MEETING
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the overarching Governance Forum that would supersede the Improvement Delivery
Group (IDP) in May 2021 would cover BAU and Change for everything we were doing
for our Postmasters and would be chaired by someone independent of Dan Zinner and
Amanda Jones, who had accountability for delivering the work
some of the “oxblood” red priorities were also the hardest outstanding tasks. The 332
actions came from a variety of sources, including the Deliotte and KPMG reports. Half
of the Postmaster improvement actions had not yet started and some of these were
contingent on other actions having been completed so we were sequencing the order
of actions carefully
the CU improvements were described and almost 70% were now closed but this was an
iterative process. We had started to split out accountabilities and responsibilities,
assigning these to individuals
16 improvements had been made to branch audits. The sense was that previously
Postmasters had felt that audits had “been done to them” while the process now was
more collaborative, data led and risk based. We had much greater ability to filter and
analyse the data and most audits were carried out by phone call with branch visits by
exception
the IDG was tracking weekly against project plans. The “oxblood” red related to non-
conformance with the judgments and we were breaking down these actions and
tracking them closely
the approach to ensuring substantive GLO conformance would be supported by
Deloitte to test legal compliance in partnership with our internal resources
any comments or feedback on the Deloitte report would be welcomed. The report had
identified 59 improvements to be make. Work had started on two thirds of these
improvements already. A third were “oxblood” red or red. It was a balanced report
and included a couple of issues that we had not identified previously. Most of the nine
themes mapped to a GE member
the Postmaster experience journey and the four people responsible for delivering most
of this was summarised
it was noted that the PSIP work linked to the Deloitte recommendations which also
linked to resource requirements. Amanda Jones noted that two further roles to
support this had been confirmed.
Jeff Smyth provided an update on the work to conform with the HU findings. He noted
that while there might appear to be a concentration risk around Simon Oldnall we had
deliberately set up an HMBU IT team and we wanted a single point through whom this
work went but there was a team to support this work. KPMG had been asked to provide us
with more support on HU to help progress matters quicker and we were tightening up our
processes with Fujitsu. JS described the testing processes and the approach to addressing
outstanding HU items. This was a juggling act because we had to prioritise various
important matters but we knew that we needed to prioritise clearing historical Known
Error Logs (KELs).
A number of points were raised and addressed:
Tim Parker requested that we circulate a list of who was on which group and their roles
so that the Board was aware of who was doing what
Zarin Patel wanted to understand the depth of the internal audit work. Garth Clark
explained that it had been a tabletop exercise but included checking that the work
planned had been undertaken although not carrying out system testing. ZP noted that
the Board needed to continue asking the questions posed by Deloitte in the report. In
the longer term there should be a focus on how the overall experience was for the
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POST OFFICE LIMITED BOARD MEETING
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Postmaster and the cultural importance of staff carrying out their work in a way that
reflected Postmaster centric values. Jeff Smyth explained that there were different
types of changes within the work including to processes and operations. Dan Zinner
explained that the current focus was on the Public Inquiry and fixing the historical
issues
* Amanda Jones explained that work on the actions shaded grey had not yet started
which was because they were lower priority issues and we were focussed on the
urgent activities currently. We had brought the work of different teams together which
drove a better process and experience for Postmasters. Tom Cooper asked how we
would know that this approach was working both from the perspective of Postmasters
being satisfied and POL managing loss rates. AJ noted that we would test certain
questions from the recent Postmaster consultation periodically. Tim Parker added that
it would be important to be able to show that a good cross section of the Postmasters
were happy with the approach we were now taking to matters, such as dispute
resolution. Dan Zinner took an action to obtain qualitative feedback on today’s Please see
Postmaster experience. NR noted that significant work had taken place to improve the below
onboarding process and we wanted to work our way through all of our processes in
this fashion but not everything would have been completed by the time of the Public
Inquiry
* Amanda Jones reported that we had telephoned 118 Postmasters recently whose
branch had been audited and 87% were happy. Tim Parker asked about the 13% who
had not been content and AJ agreed that this needed to be examined. TP noted that
we wanted to understand what the problem had been for the 13% and establish that DZ/ AJ —
there was nothing material within this. Nick Read noted that we wanted to examine all °verarching
the problems we had fully, assess these, prioritise them and address them an he
* Tom Cooper asked about the end result of the changes which it was hard to track points made
through in the paper i.e. For example, in relation to MIS provided to postmasters what at the
improvements would be delivered as the actions were completed and what were the _ meeting
tangible actions? It was agreed that Amanda Jones and Jeff Smyth would provide some 2>out how we
examples as they took the Board through the changes to the disputes process and to. new nat he
the Horizon system, respectively swere
* Tom Cooper asked about the issue of settling centrally, what would replace this working and
approach and how complaints would be dealt with recorded and addressed ebtained oe
« Zarin Patel asked whether we were going to address all of the actions some of which feedback on
were difficult and costly and where we might have to form a judgement on whether this on this
the approach was warranted. Amanda Jones agreed that the actions were complex regularly,
and interwoven keeping
+ Anumber of directors wanted to know more about the settlement process. Amanda tions
Jones explained that currently if the amount contested was less than £150 the only raised in the
options available to the Postmaster were to settle by cash or cheque. There were four Deloitte
actions in progress to resolve this position and by September 2021 we wanted there to ePort
be an option to settle centrally or to use a dispute button on Horizon to require further
investigation to take place. The Branch user forum was seeking to identify a solution
that would work for Postmasters. Branch disputes linked to some of the KPMG
recommendations and there had been some organisational changes to support this
work. Jeff Smyth noted that putting a dispute resolution button on Horizon was not
particularly difficult but were also wanted to engage with Postmasters on what they
wanted as a dispute resolution process and these discussions had been taking place
with Postmasters while we also looked at how this mechanism linked into other
processes. This would take some months but we would build in the functionality for
the dispute resolution button in the meantime. A significant amount of work and
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communication was required across a number of teams to be able to provide a settle
centrally option for less than £150. Tom Cooper asked whether if an item were
disputed and was put in for central settlement the disputed sum would be seen
separately. JS explained that you would not see the sum in dispute but there would be
a note to say that there was a current dispute. We could not put in place a suspense
account currently but were breaking down the overall action into a number of parts.
TC asked how the cash position would work. JS explained that Postmasters would have
a log with a point in time reference with the detail of the information they had
provided. TC asked whether that meant we would still have to deduct the sum from
the Postmaster. AJ explained that there would be a corresponding balancing item in
version 2.0 but there would be an imbalance now. Al Cameron added that in practice
we did not pursue Postmasters for outstanding sums and provided for 60 days in the
accounts. Tim Parker noted that this issue was at the heart of the judgments where the
Postmaster was having to pay first and then we go through our process. It was vitally
important to be able to show that no money was leaving a Postmaster’s account in
advance of a dispute being resolved and he noted that there was also a moral hazard
associated with not resolving losses. AJ noted that the issue related to sums below
£150 and we were focused on fixing this quickly. Nick Read added that operators
would be part of the “show and tell” process for the Public Inquiry which should
demonstrate that there was not any Postmaster detriment. Dan Zinner added that we
were breaking this problem into segments and also working on the appeals and
disputes process, looking at having independent appeals panels at the point of
termination
Lisa Harrington noted that the references to the culture had not referred to the Board
and this was where the approach on culture needed to start but this was likely to be
addressed through the discussions on the externally facilitated Board review
Tom Cooper asked Nick Read about his letter to the Fujitsu CEO and how that had been
received. NR explained that there were a range of issues we were working on with
Fujitsu and we had dependencies on them but both parties were trying to work
collaboratively. The main issue was that there was a finite amount of resource. NR
reported that he was meeting weekly with the senior KPMG partner and this work and
relationship was working well. Al Cameron noted that at some point we would need to
be clear with people that the best thing we could do for Postmasters was to get off the
Horizon system and that would mean we could not add much functionality in three
years it would take to exit
Tom Cooper asked about what assurance there would be to be able to show that the
changes we were making to Horizon and migrating off Horizon were working and that
the system was doing what it needed to. Jeff Smyth explained that there would always
be regression testing. Each time we did this we were checking that we had not pulled
back in previous bugs and errors. The testing processes were therefore taking longer.
TC noted that one of the Public Inquiry questions was whether POL’s systems and
processes were fit for purpose but it felt as though until we had migrated off Horizon
we could not deliver everything the company and Postmasters wanted. JS noted that
they would be different interpretations of fit for purpose but we were strengthening
the system wherever we could and would continue to drive improvements. Tim Parker
noted that part of the issue with Horizon was the reputation of the brand but the
system we had today was substantially different earlier versions although like all EPOS
systems there would be some bugs. The key thing was that the system should not be
unfair to Postmasters. We had not sought to compare Horizon with other retail EPOS
systems and we needed to be careful not to accept that migrating off Horizon was the
solution to all of the current problems. There was a difference again between the
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POST OFFICE LIMITED BOARD MEETING
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perception and reality. Tom Cooper noted that we needed to be able to respond to
this question at the Public Inquiry. Al Cameron noted that we were building acaseto —_JS/ Zdravko
replace Horizon because the system was not supportable in the longer term. TP Mladenov
concurred that the system would need be replaced but it was a question of timing and
sequencing given the risks around changing systems and Post Office’s other priorities
Zarin Patel thought that Deloitte had produced a good report and she would reinforce
the point Lisa Harrington had raised about governance and culture needing to drive
postmaster centricity. The Board should be focussing on whether we were delivering
against the ten questions Deloitte had suggested needed ongoing focus. Dan Zinner
noted that we had sought to drill down to the tangible outputs and how this improved
postmaster experience. ZP asked whether we thought the Deloitte Report would be
published as part of the Inquiry. DZ thought it likely that we would refer to the Deloitte
Report during the Public Inquiry and it was likely that the report would be requested. DZ
ZP noted that the comments included in the Report on culture were about 6 months
out of date and we should reflect the changes that had been made. Tom Cooper asked
how we would know that these questions had been addressed which brought him back
to his question about the end point for this work. DZ noted that improvement work
would always continue and would never finish. We would be addressing that we were
doing what we needed to do to be legally compliant; the wider work on improvements
entailed a more subjective judgement but we would be able to inform our view on the
efficacy of the measures through tools such as surveys. TC thought that the Board
should review the outputs of the Postmaster Consultation. We also needed a checklist
for what Postmasters needed to run their Post Office effectively. Dan Zinner reported
that the Branch Hub project would enable self-serve for Postmasters and he could take
TC through those plans. We were working with Branch user forums on what AM/
Postmasters needed. TC recognised that this was an iterative process but it would be Quadrangle
helpful to understand what the improvement process looked like. Tim Parker added oz
that we needed to be sure that we were investing sufficiently into surveying
Postmasters. Nick Read noted that the survey we had just completed in which over
1,700 Postmasters had participated had identified the top issues for them and we were
seeking to triangulate this with the Deloitte and KPMG work but did not want to over
engineer this. A Post Office was part of someone’s retail business so simplicity and
low-cost provision was important. Amanda Jones added that it was mostly simple
information that could assist a Postmaster to grow their business and make access to
this information and support self-serve would be important. TC wanted us to be clear
about what is needed to provide for a Postmaster to operate effectively, whether we
were doing this and if not by when we would have done this
«Tim Parker noted that we needed to make sure that there was a slide facility that could
be accessed for those providing evidence to the Public Inquiry and a central repository
for this information. Dan Zinner reporting that we would start preparing that in May
and could create a one-page format for a range of issues.
Tim Parker noted that the team had done some really good work with many strands toit ©
and wanted people to know that their efforts were much appreciated by the Board and he
would send some thank you notes to this effect; he was keen that the voice of the
Postmaster was heard to bridge the gap between the past mistakes, the press reporting of
this and how Postmasters felt currently.
Dz
It was agreed that Dan Zinner would provide a monthly update report for the Board.
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POST OFFICE LIMITED BOARD MEETING
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4. Any Other Business
There being no further business the Chairman declared the meeting closed at 17.00 hrs.
08:47
Chairman
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