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Post Office Group Litigation
Confidential and legally privileged advice
Do not disclose, forward, scan or copy foun
DICKINSON
DRAFT Mitigation Actions
This mitigation paper should be read alongside the Risk Assessment Table that explains the risks associated withthe issues to be decided by the Court at the
trial in November 2018.
This paper groups those risks under 4 headings:
A. Recovery of losses
B. Training and support for subpostmasters
C. Suspension and termination of subpostmasters
D. Business transformation
It sets out the mitigation actions that could be undertaken by reference to four categoriés of change
« Contractual
* Horizon
e Operational
« Communications
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A. Recovery of losses
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Risk: Post Office is unable to recover shortfalls in branches unless it can prove a Subpostmaster is at fault.
Risk Assessment Issues: 1, 12, 13, 17 18 and 19
I ADVANTAGES
TYPE OF PROPOSED CHANGE DISADVANTAGES:/ CHALLENGES I RECOMMENDATION:
CHANGE ACTION NOW?
Contractual Amend wording of Reduces likelihood of the Until the Judgment is delivered, it is not possible I No to implementing contract
Subpostmaster contracts to
make clear that spmrs remain
responsible for shortfalls.
Judge reaching a finding that
would prevent recover of
shortfalls from spmrs.
to draft a perfect clause that covers all
eventualities. The judge could find that there is
an overarching point of law that supersedes any
contractual change.
Significant resources needed to rall out a
contractual variation to all branches.
If done before trial:
* Leading Counsel! have advised that
this would seriously undermine Post
Office's case at trial.
© The amendment may be ineffective
as Post Office's power to vary
contracts is a point of dispute in the
litigation.
NFSP could lobby Govt to intervene and prevent
Post Office from moving to the new contract as
they will claim that it adversely affects the value
of existing spmr businesses,
Network numbers under threat/decline as a result
of a lack of new spmr applicants due to the new
contract terms.
amendments. Counsel
strongly advises against
making contractuai changes in
advance of the judgement
being issued.
Recommended action ahead
of November judgement:
1. Prepare the suggested
contractual
amendments with a
view to implementing
them, if necessary,
once the Judgment is
issued.
2. Design and fully scope
associated
implications of end to
end approach to
terminate existing
contracts with agents
and re-contract with
them on the varied
ones.
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I Contractual Change to new franchise All financial risk placed on See comments above. No. As above.
model. spmrs. Could lead to significant downsizing of network.
Small / rural branches likely to be more
impacted.
Yes..Recommendation is that
this proposed change is
- Scoped further to determine
system ‘and operational °
feasibility and associated
Horizon ~
_Yes.Approach recommended
‘as best practice with ;
‘I implementation subject to cost
cua IW benefit analysis.
Recommendation is that this
bn} approach-is scoped, costed
I-and implemented asap. -
9 g
investigation:bsing produced
and shared. with spmir/b
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‘ombudsman’ revie
over-disputes about loss 5
Operational * I Increase in branch audits. Identify problems earlier so. I wmeraaoes in-audit team. neaddoun d No: BAU has.already
: L to reduce losses... ithe: volume, of. branch. audits. ronuled implemented
Coftéct bad practices in '* a el Sul Seietuls it
branches that < are ‘Reding fo*.:] PeSOrE en geadert is tpmonitor
esses: impact of. new approach to
assess Whether change
: feduces losses.
Operational get up: ilouitenk juarantee that an Ombudsman would’ agréée - No.’Recommiendation is to
lw h Post Office onthe root Cause of a loss.
“Outcome stil: dependent on Judge’ 'S findings on
reliability of Horienn and ot responsibility for
losses.
wait for the judgement.
Communications
Communicate to branches.
common types of user error.
Improved practice in
branches, leading to
reduced losses.
Potential to highlight problems and increase
complaints from spmrs.
Negative media coverage around a
communication iooking to blame users for errors.
No, Recommendation is to
wait for the judgement.
Communications
Communicate to branches that,
Post Office is appealing any
adverse Court decision and that
the decision should not be
followed until the appeal is.
heard.
Spmrs may continue to pay
shortfalls.
I Negative media coverage if Post Office is seen to
be ignoring a Court decision.
No. Dependent on judgement.
Communications
Communicate {in conjunction
with the NFSP) that if somrs do
not pay losses the network is
not viable so they should keep
paying losses.
Spmrs may continue to pay
shortfalls.
\ Negative media coverage.
No. Dependent on judgement.
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B. T ing and support for postmasters
Risk: Post Office is legally obliged to provide a high-standard of training and support and perfect accounting system.
Risk Assessment Issues: 1, 4, 5, 11 and 14
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TYPE OF PROPOSED CHANGE ADVANTAGES DISADVANTAGES / CHALLENGES RECOMMENDATION:
CHANGE " ACTION NOW?
Contractual Amend wording in Increased clarity for both See points above at A contractual changes No to implementing contract
Subpostmaster Contracts to
make clear that Post Office will
provide Horizon, training and
support, but only to a low /
minimum standard.
parties on what Post Office
is committed to delivering.
These terms are also being challenged as unfair
under the Unfair Contract Terms Act. Post Office
cannot contract out of this risk. See Issue 16.
amendments. Counsel
strongly advises against
making contractual changes in
advance of the judgement,
being issued.
Horizon
-I ihtroduee a more.user
= I: version of Horizon hel
Horizon
Pthis: proposed change is
Yes. Recommendation is that
I Horizon:
mmendation is that
ed change is
Sc6ped further to determine
system.and operational
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“I the branch has implemented I
the advice/instriction from’ -
the helpdesk correctly.
feasibility‘and. associated
costs.
=
Horizon,
“Automate igh risk transactions. SOR
'$0 to remove manual entry of =
“data in branch.
cI
“customer experience
x “Better user experience: .
s.costis likely to be
“signi icafit and implementation.
complex, recommendation is
to:wait for the judgement.
Operational
Monthly review ofall points of
failure in-branch so to,
continuously improve
processes.
Reduce problems in branch.
Faster.detection of any
problems with. Horizon.
Increase i headcount: and siprove ‘ME
reportin:
Gost estimated: fe: be eee £100k Pa
Yes. Approach recommended
as best practice and cost is not
‘significant: Recommendation
is: that this approach is: scoped,
a itely costéd.and ©”
Operational
Increased training..
Better trained spmrs.
Yes: BAU review of training is
already underway with input
from. earlier Sparrow lessons
learned work.
Recommendation is to await
_ I Outputs‘of review and then
assess if further changes are
required:
Communications
Regular communication to
branches about problems in
training practices and Horizon.
Transparency with branches.
Potential increase volume of complaints from
spmrs.
No. Recommendation i is to
wait for the judgement.
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c. Suspension and termination of subpostmasters
Risk: Post Office's rights to suspend are fettered and it can only terminate on 12 months’ notice.
Risk Assessment Issues: 20, 21, 22 and 23
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TYPE OF PROPOSED CHANGE ADVANTAGES DISADVANTAGES / CHALLENGES RECOMMENDATION:
, CHANGE ' ACTION NOW?
Contractual Amend wording in This change would likely See points above at A contractual changes No to implementing contract
Subpostmaster Contracts to future proof Post Office's . 7 amendments. Counsel
make clear Post Office's rights I termination and suspension These lerms are iso being challenged as unfair strongly advises against
on termination and suspension. — rights. aan making contractual changes in
cannot contract out of this risk. See Issue 16. advance of the judgement
I The Claimants also argue that the standard being issued in November.
contract is a "sham" in relation to termination
rights. This argument cannot be mitigated
through a contract change.
I Horizon None : :
Operational Introduce: more rigorous Reduction in number of Potential slowdown in commercial transfers and.) No. This is a. complex piece of
Sy recruitment and on-boarding terminations needed -. adverse impact on whitespace network work and nota quick fix {
processes. > especially. within first 1-2 extension... therefore recommendation is
years of appointment... May decrease network numbers to'wait for the judgement.
Operational Stricter processes around Greater assurance that I Se:in.headcount-for pre-audit Yes. Assessment is that this
' suspensions. suspensions are valid: investigations: is likely to.go against PO.
: eae . Recommendation is that this
More. investigative: work done in The potential foran extended suspension i"
advance of audit... process may leave high-risk spmrs in branch for approach is scoped, costed
longer.
and implemented asap.
Communication
None
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D. Business transformation
Risk: Post Office's rights to vary its contracts and operational practices are curtailed. Its exercise of contractual powers are:fettered.
Risk Assessment Issues: 6, 7, 8, 9,10, 15 and 24
TYPE OF PROPOSED CHANGE ADVANTAGES DISADVANTAGES / CHALLENGES RECOMMENDATION:
CHANGE i ACTION NOW?
Contractual Amend wording in Increased clarity for both See points above at A contractual changes. No to implementing contract
Subpostmaster Contracts to parties. " . amendments. Counsel
make clear that Post Office is These terms are also being challenged as unfair
strongly advises against
free to exercise discretions and under UCTA. post ofice Gennet conic! OULOT making contractual changes in
powers as it sees fit. advance of the judgement
being issued in November.
Contractual Change to franchise model The change of relationship See points above at A contractual changes No to implementing contract
to a purely commercial bee a amendments. Counsel
franchise model would allow I COUld lead to significant downsizing of network. I strongly advises against
Post Office to freely operate Likely closure of small / rural branches. I making contractual changes in
as a commercial business, advance of the judgement
with less risk of spmrs being issued in November.
claiming special protections
Horizon None
Operational Mote detailed explanations and © Greater assurance that Post. I Increased cost of change. I No. Recommendation is to
justifications will be required for. Office is acting within its wait for the judgement.
any contractual and operational I powers. Pelay in.implementing changes.
change. I Reduces chance of changes I
i being disputed I
Operational: Increased :and/or earlier, _ Enhanced level of buy-in Increased cost of change. I No. Recommendation is to
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involvement of NFSP in
contractual and operational
‘changes.
from spmrs,to:changes due
to.greater involvement from
NFSP.
Delay in implementing changes.
wait for the judgement.
Communication
Increase communication
around the benefits of changes
to the network.
Reduces chance of changes
being disputed.
Cost of increased communications.
No. Recommendation is to
wait for the judgement.
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