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Agenda Item 6.2: Consequential Loss Review
POST OFFICE LIMITED
HISTORICAL MATTERS COMMITTEE
cone CL Guidelines and HSS/Stamp 7 . th
Title: Scheme Review Meeting Date: I 5" July 2023
Workstream: I Governance/COO Version: 1.0
Author: rvelyn Hocking ~ Programme Sponsor: Nick Read - Group CEO
Input Sought: Discussion
HRC is asked to:
i, discuss this report in relation to the issuance of Consequential Loss (CL) Guidelines for
applicants to the Historical Shortfall Scheme (HSS) and the Stamp Scheme,
ii. consider if HMU are confident that everything has been done to ensure as many claimants
as possible have applied to the HSS and the Stamp Scheme and that they had sufficient
information available to them to make a full claim in respect of shortfalls and
Consequential Losses, or if anything further should be done prior to and in conjunction
with the announcement of the scheme closure date.
iii, discuss whether additional sampling should be undertaken at this stage.
Previous Governance Oversight
A number of papers have been presented for discussion on CL Guidelines since 2020 with the
key documents attached or summarised in the appendices to this paper.
Executive Summary
The Historical Shortfall Scheme was launched on 1st May 2020 through a combination of
physical letters sent to previous and current Postmasters, by email to those who had signed up
to ‘One’, in numerous press and media outlets across the country over a period of weeks, and
on the Post Office Corporate website. The launch on 1%t May 2020 was postponed from the
original launch date of 23" March 2020, which was the day the country entered the first period
of lockdown due to Covid 19.
On launch day, 7,100 current and 13,800 former PMs were contacted with a further 6,200
former PMs, who had inadvertently been missed from the original mailing, being contacted in
July 2020. The letter guides PMs to a link on the POL website, does not mention Consequential
Loss and there is no Post Office telephone Helpline available for PM’s to call. The Application
Form for HSS was not included in the letter that was sent nor were the Terms of Reference,
rather PMs were directed to access the link on the website, download and complete the
Application Form and review the Terms of Reference, and either email, or print and post the
forms to POL. Against a background of Covid 19 and lockdown, it is difficult to say how many
PM's received letters, accessed the website and were able to submit a claim.
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The Consequential Loss Guidelines were approved on 16" September 2020, and it was agreed
that these guidelines would be sent to all applicants to HSS and would be published on the POL
website in October 2020. At this point there were 2,211 applications from claimants, meaning
that approximately 25,000 Postmasters did not receive Consequential Loss Guidelines at all.
In addition, c60 Shortfall only claimants (plus 146 who did apply for further losses to be
considered) who applied to HSS after the Consequential Loss Guidelines where published did
not retrospectively receive the Guidelines.
A paper was considered at HMC on 18" January 2023 which considered the issuance of CLG
being sent in October 2020 and concluded that no uplift in applications was experienced after
the mailing of the CL Guidelines. It should be noted that the CL Guidelines were only sent to
actual claimants. The paper was subsequently presented to HRC who concluded that further
investigation was required. See Appendix 6.
See Appendix 1 for flow of different communications including applications, letters and CL
Guidelines.
Report
A review of Post GLO SteerCo documentation between February 2020 and the publication of
the CLG in October 2020 shows the following:
1. Minutes of the meeting on 27" February 2020 discuss the development of HSS, Convicted
Claimants Workstream, Common Issues and Ops Modernisation which are attended by
amongst others, Angela Van-Den-Bogerd and Nick Beal who had previously given evidence
at Bates v‘s Post Office an extract of which can be found at Appendix 5.
2. POL Board was presented with a decision paper on 10° March 2020 essentially agreeing
the launch of the HSS and communications, the Application Form, Eligibility Guidelines for
HSF Triage, the PM letter and Governance considerations. POL Board approved everything
that had previously been proposed by the Post GLO SteerCo except for a few minor
alterations to the PM letter. The Application Form did not define the types of additional
losses a PM could claim for. The approved HSF Triage document
REDA
but this guidance was not included in the Application Form. . Please see Appendix 4 for
excerpts of these documents.
3. On 9 April 2020 SteerCo debated how to “frontload’ the work in relation to people who
had previously inquired about the scheme and also whether HSF or POL should be the
‘name’ behind the scheme application correspondence. It was recommended to be POL
for two reasons:
i, It is unlikely that HSF would ever be perceived as independent; and,
ii. A key risk of using the HSF name is that it will create a David v Goliath scenario
(vis. unsophisticated individuals having to fight their cases against the might of a
big city law firm). In those circumstances, pressure may be put on PO to fund the
costs of legal representation for the Claimants to level the playing field. This would
(a) be expensive; and (b) encourage a claims management company / no-win-no
fee culture that we really want to avoid if at all possible.
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POST
Claes,
4. On 9" April 2020, a SteerCo Communications update stated:
Historical Shortfall Scheme Comms:
+ Media coverage on the postponement of the Historical Shortfall Scheme was
relatively limited, unsurprisingly in present circumstances, and there was no
criticism of the delay, outside of very limited social media (CWU).
+ Both internal and external communications, including FAQs have been updated in
readiness for a scheme launch on 1 May and will continue to be kept under review,
including practical issues e.g., postal services and any impact on suppliers and/or
timescales in context of impact of Covid-19.
5. On 23% April 2020 SteerCo recommended Go Live on 1% May 2020 with appropriate
advertising - for example 4 National Papers, 26 Regional papers and over 500 paid for
and free local publications.
6. On 29" April 2020 SteerCo reported that a total of 148 potential claims had been received
of which 63 are partially quantified and amount to £1.2m. Further review of the next steps
for these claims could be undertaken to ascertain how these applicants were aware of the
imminent launch of HSS. Of the partially quantified claims:
i. 10 are quantified at less than £1,000.
ii. 17 are quantified between £1,000 and £5,000.
iii. 23 are quantified between £5,000 and £25,000.
iv. 11 are quantified between £25,000 and £100,000; and
v. 2 are quantified in excess of £100,000.
7. The HSS launched on 1% May 2020 with letters and emails sent to former and current PM’s
and asked for the Application form and ToR downloaded from the website and to be
emailed back if possible. Alternatively, it could be posted, but stated that postal
applications may not be processed immediately given the Coronavirus situation.
8. On 27% May 2020, SteerCo debated the introduction of a de-minimis settlement category.
In addition, it was discussed that:
i. There has been continued correspondence with Hudgell Solicitors, who are instructed
in relation to the Scheme by a number of clients. Hudgells are considering whether
to advise their clients to join the Scheme. Following an initial response sent by HSF,
this further correspondence has confirmed that claimants can claim consequential
losses (i.e., indirect losses arising out of special circumstances of a case), the onus
of proving those losses will be on the claimants and that the claimants are entitled
to have legal representation at their own expense.
Claimants represented by Hudgell therefore had the benefit of being informed that they
could claim for consequential losses in May 2020. The letters referred to from Hudgell
and HSF have not yet been seen. The Application Form asks if a PM has experienced
any other losses that are directly related to the alleged shortfall in respect of which they
would like to claim. The definition of CL in our CL Guidelines states: ‘Consequential Loss
means financial or non-financial loss that is not a Shortfall Loss’.
9. On 17" June 2020 SteerCo debated how to contact PM's who did not receive a Letter in
the original mailing and confirmed that at this stage 560 claims had been received, 159
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fully quantified (£3.9m) 263 partially quantified (£8.1m) All claimants to date have been
unrepresented.
10. On 24‘* June 2020 SteerCo reported that 617 claims had been received and all claimants
were unrepresented. Also, it was noted that approximately 7 times more former PM’s had
applied than current PM's.
11. On 1% July 2020 comms update said an internal ‘Reminder’ Comms was sent to current
PMs on 25" June 2020, and that repeat media advertising would commence over a two-
week period from 13** July 2020 and there would also be a press release ‘reminder’.
12. On 8" July 2020 SteerCo states:
REDACTION
13. On 15" July 2020 SteerCo confirms data extracts are underway to mail the additional
6,200 who had been missed from the original mailing on 20" July 2020 - later confirmed
to be sent on 224 July 2020.
14. On 22" july 2020 Steerco confirms that the de-minimis limit has not yet been agreed,
and that the tax treatment of components in HSS is to be discussed with HMRC following
consultation between HSF and POL Head of Tax Andy Jamieson.
15. On 30" July 2020 SteerCo presented an HSS Applications Analysis by Branch/Geographical
Region. It was also confirmed that the deadline for the additional cohort to apply to the
scheme would be 23" October 2020. Additionally, the recommendation on how to set up
the Stamp Scheme was agreed. One of the disadvantages of the stamp scheme coming
under HSS was listed as:
i, Potentially a backdoor for consequential loss claims to be considered in the
scheme.
16. On 4‘ August 2020 SteerCo revisits some decisions regarding the Stamp Scheme launch
and in particular recommends that ‘POL takes a narrower approach in publicising the
stamp scheme (compared to the HSS) to ensure the advertising approach is proportionate
to the issue.
17. On 19% August 2020 SteerCo reports a marked increase in the number of HSS claims
being submitted towards the end of the application window on 14 August 2020, with 6
claims now submitted from claimants with Legal representation. The CL Principles for the
scheme are being finalised with input from Rory Phillips QC
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18. On 26" August 2020 A Judicial Review Claim was issued in the Administrative Court by Mr
CS specifically challenging PO’s decision:
i. not to extend the time allowed for candidates for the Scheme to decide whether
or not to join the Scheme.
ii, not to supply candidates with “sufficient information with which to make a fully
informed decision” as to whether or not to join the Scheme; and
iii. to require candidates to surrender civil rights when joining the Scheme without
first having supplied them with sufficient information with which (and with
adequate time thereafter) to make a fully formed decision.
19. Mr Justice Holgate opined on 11 March 2021, that the application for permission to apply
for judicial review was refused.
20. On 10" September 2020 2,208 claims had been received. At this SteerCo the HSS
Proposed ToR and CL Principles and Guidance were presented and approved.
21. On 23' September 2020 SteerCo presented the outline of the Stamp Scheme that was
due to go-live on 23" September 2020, with a decision required on CL. Two proposals
were put forward as detailed below. Consequential Loss Guidelines were not sent to
claimants in the Stamp Scheme.
REDACTION
22. On 24" September 2020 Board decided that the HSS de-minimis amount should not be
set at £20,000 as recommended by HMU but should be at £8,000 with a compound interest
rate of 3.26% to be applied.
23. 21%* October 2020 SteerCo confirmed that the Consequential Loss Principles were emailed
to Claimants in the scheme on 2" October 2020 and posted to applicants on 14" October
2020 (2,291 applicants). At this point there were 2,291 claimants who received CL
Guidelines. Those who had been invited into the scheme but who had not made a claim
did not receive CL Guidelines - and have not since received them. The actual letter is in
Appendix 2 and Consequential Loss Principles and Guidance can be found in Appendix
3. The letter says if a claimant no longer wishes to progress their claim, they can withdraw
it at any time.
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24. The Stamp Scheme closed on 27" November 2020 with 204 claims. The report states:
i. Of the 197 remaining:
ii. 59 claims are fully quantified stamp losses (with 3 also claiming consequential
loss)
iii. 32 of these are <=£2,000, totalling £24,787
iv. Of the 32, three have a claim with HSS but none mention stamps (the Stamp
claims are £150, £574.56 and £1,940)
v. Only one of the 32 claims has a request for consequential loss (which we'll decline)
25.
REDACTION
26.
REDACTION
27. On 1% October 2021 HRC were advised that the principles for CL cases were being updated
by HSF.
28. On 19 October 2021, HRC debated the progress being made in HSS and in relation to
the completion of the CL principles. HSF advised REDACTION
REDACTION
29. On 20 January 2022 HRC debated the drop in performance within HSS and concluded
that one reason was that the CL principles had not been decided which constrained 56
cases from flowing through to the Panel.
itional Analysis and Financial Impact
Consequential Loss Guidelines
30. When the CL Guidelines were published in October 2020, these were only sent to
claimants, not to the population of potential claimants. Also, as in Appendix 1 there was
a cohort of 60 Shortfall only claimants who did not receive CL Guidelines
31. Additional information and review by the HSS team, states that a review of Relativity
shows the following:
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Applications submitted before 1st October 2020 had a shortfall only/Consequential
Loss claim split Of 42%/58% (929 claims/1282 claims)
Applications submitted after 1°t October 2020 had a shortfall only/Consequential
Loss split of 29%/71% (60 claims / 146 claims) - however no CL Guidelines have
been sent to the 60 shortfall only claimants.
32. Late Applications submitted after the CL Guidelines had been published had a shortfall
only/ Consequential Loss claim split of 20%/80% (39 claims / 159 claims)
Legal Representation
33. Additional information and review by the HSS team, states that a review of Relativity
shows the undernoted information. A fuller review of Legal Representation is in course
and will be presented in a separate paper.
Overall, for the 2417 original claims, the average initial Offer is £92.6k for those
claims represented and £35k for those unrepresented. Lower DM claims were
proportionately less represented than non-de-minimis claims.
Shortfall only claims with representation have an average offer of £17.7k
Shortfall only claims without representation have an average Offer of £9.6k
CL claims with representation have an average Offer of £101k
CL claims without representation have an average Offer of £55.4k
Request for Further Information
34. An RFI is an opportunity for information to be submitted to help with the assessment of a
previously submitted claim. CL Guidelines are not sent with the RFI to assist with
additional losses a claimant may wish to make, rather it asks for information on HoL’s
already submitted. One RFI reviewed where there were 3 HoL’s asked the claimant c75
questions and asked for scanned documents in support to be sent back. When an RFI is
sent, further information is only requested on the HoL’s already applied for, CL Guidelines
are not re-sent. Further analysis of 5 claims where an RFI was requested have been
analysed and summarised below:
Chime I otterinuea I seu I oa rae ‘a Form
‘et ir sow?
REDACTION
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REDACTION
35. The financial implications of any decisions taken as a result of these discussions will be
undertaken in due course. For the time being, it is important that the correct decisions
are taken in respect of Postmasters and the financial implications will be subject to a
further piece of work dependent on the outcome of discussions.
Legal Review by Counsel
36. This paper was reviewed by the Inquiry counsel team, Sam Jones and Kate Gallafent KC
and feedback provided on 26 June 2023.
i
REDACTION
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Input / Reviewed By:
t ae =
Evelyn Hocking Author Initial Version Drafted 0.01
Andrew Mortimer Programme I Version 0.01 and feedback 0.02
Manager provided, incorporated into version
0.02
Caroline Whitehall Legal * Legal Review section added 0.02
*Mandatory Review Required ** If Applicable
Appendices:
Appendix 1 - Communications Flowchart
Appendix 2 - HSS ToR Letter
Appendix 3 - CL Principles and Guidance
Appendix 4 - Guidance for Triage Team / Application Form for potential Claimants
Appendix 5 — Extract from Bates vs Post Office
Appendix 6 — HSS Application and CL Inquiry Observations
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Appendix 1 - Communications Flowchart
CL Comms
HSS Launch Comms
July 2020
Current and Former PM
May 2020 20,900
Former PM
6200
__.__-Post-Oct 2020
Applications
Cohort 2 - SF Claims Cohort 4 - SF and CL —— _ Pre-Oct 2020
Oct 2020 icati
929 (az%) 1282 (ss%) Applications
Ty
No CL Comms ?
Coben 1-5
60;
‘Shortfall only Claims Shortfall and CL
989 1428
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Appendix 2 - HSS ToR Letter
Post Office Historical Shartfall Scheme
PO Box 76882
Landon
ELW ORR
[Wame of postmaster]
Linsert postal address]
13 October 2020
Dear Applicant,
Historical Shortfall Scheme: Terms of Reference for the
independent advisory panel and consequential loss
principles
Thank you for your application to the Historical Shortfall Scheme.
We are now pleased to announce the publication of the Terms of Reference for the
independent advisory panel that will assess eligible applications and.alsq the
consequential loss principles for the scheme. We enclose copies of these documents
with this letter.
The contents have been agreed with the independent advisory panel and confirm the
key principles that apply in the assessment of applications. Please read the documents
carefully.
We hope you will welcome the principles set out in these documents. If, however, you
no longer wish to progress your application for any reason, you may withdraw it at
any point up until you receive an outcome confirmation from the scheme, but we hope
that you will want to remain in the scheme.
We will keep you updated on progress with your application. In the meantime, if you
have any questions please contact historicalshortfallscheme@postoffice.co.uk,
Yours faithfully,
Historical Shortfall Scheme.
historicalshortfalischeme}
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Independent advisory panel Terms of Reference and consequential loss
principles — explanatory notes
Post Office has published details of the independent advisory panel Terms of
Reference and Consequential Loss Principles for the Historical Shortfall Scheme which
have been agreed with the independent advisory panel.
These documents confirm the key principles that will be applied in the assessment of
applications and include a numbec.of provisions designed to benefit postmasters. In
particular:
* Although many of the shortfalls described by applicants occurred many years
ago, the Historical Shortfall Scheme will not allow the laws of time-bar or
limitation to have an adverse effect on offers made to scheme applicants
* The panel has the power to recommend that offers be made if, guided by
broad considerations of fairness, they consider that doing so would produce a
fair result, in all the circumstances of the case.
These terms of reference and principles are a significant step in the Post Office's wider
efforts to ensure we put past issues right where we got things wrong. By making the
Historical Shortfall Scheme available, Post Office wanted to ensure that all current and
former postmasters who consider they were adversely affected by shortfalls which
might have been caused by previous versions of Horizon are able to access fair offers
of compensation without the need for protracted and costly legal proceedings.
Post Office hopes that the principles set out in these documents will be well received
by applicants. However, if any postmaster does not wish to progress their application
for any reason, they can withdraw from the scheme at any point up until they receive
an outcome confirmation, but we hope that applicants will want to remain in the
scheme.
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Appendix 3 - CL Principles and Guidance
Historical Shortfall Scheme
Consequential Loss Principles and Guidance
1. Scope and Background
OP iter laqievelrwed: thie Hitter! obimictive’ ol
Consngivenatal Loni cobaes livancial ov noe-foraictal los her portlall Losk
Etigihte Claim mean ation thar bas bi «
Schewnei el teria’ and in hbentibed te
in. support of their claim te
biketibinad Ff sis han
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Judgment os thie Horizon issues Judgment): This means evidencing she Fact that a baes was incurred. the
amount of that lors and thal the cause of the lovs wat due w a Horizon Shortfall
BILZ. White the postindatér@ viable te satis the: burden of pst in relation to their clientele laity itay
sonétholew be accanead i whole orin gare # the Scheme considers eto te fat in afl the cecumatancet
supported by videece aru mon iby ta bia suckesstl Gudarcy oe tna bn oe
ry poleritial claims for Comequential Loss is et out further below.
22, Gree cos wwii be wached te
4) contemporaneous aideme: and
1B) Factuabeviddnee thar undigiutad ander vendiable
3.23. The need to provide evidencerir partivolarly important where s pustmaster's claim relates to matters which
-are known only to the. pesstinsster: Mi-hily the burden iy ds peostmiastets to provitie sufficinit evidarien
to duimonerana their claire for Conseganntial Los, the Scheme wél alee corivicer ary celavant evidence
Port Office holds when ainesing the claim: Any kay sunportity documiatstion relard upon wil be shared
wath potmastirs when they receive the ourcoog 10 cansighee whether they
wal to accept the olfore made te thei
33. Established legal principles
TM, teeonsidiving a claim fx Consequentist Low. the Scteme will apply the tradeggs in the Commer tees
2udgmirst and the Hortson bison Jucdgeiint celery ty the clas and anny tebevart logal sind akcowtting
ntciciplen applicable cf the ausesioneen of damages for bi Fiduty when dacerenining whether
ssn a-bslance st probabilities, the lat claimed is siribatabie to a Hhaciane Sheotfatl ln making thal
assonsmment the Sehome will consider:
a} Cawsenion
‘The Horizon SI ali ier hiv cavved the
fined hippened boi lee the Horizon Sheetal.
# the postmaster weld have found themmelves #1 the came position th any event ctmagectiog of the
Histor Shoortdiall the Scherrne wll nat bee abhietes ceviche thet thar Heatizers Shuwtsl! cassette
‘Consequentiil Loites the poniniaster may have suffered
b} Remotensss
“hie (ormnegqee ota Liss mess eat bie tet nergy Gai, Ge Ceo
Hertsecdbile @ the time. of the tHofeeds Sherrill),
2) Mitigation
Assuming thay cavstien is eitablished (and the ConsequentisI Lori i nist tac emote), the Scheme will
‘shnitder the entent iowhich the Cemsoxiceriial Lane was or could reasonably have been mutigatéd by the
posinaster, or commenaly wie ajigrncated by resonable: atemges by the pastmaster te avoid ox radicw the
Consequential Loss
Quantum
gmctobithe ainensment wil be. io fine as the mward af ann of migney ea de ne, toipud thee
aster adr tie pacition thar the pamela anid have been w but for de Hoctuon Shatall,
492. Pease noe thatthe aboue’e inended as a poide enlyit snot an exhaustive la af the legal peinciples that
may be applicable to aby peitculs claim for Conskavential Lams. The application of the above principles
will be fact-spucitie and will depeiied on thi citeunsitanges of the postcas ginieths Concmmuontié
tow clint
Ba. bimitation
5.4.3, Many Ehigta Cate oil setana tp Shortlall Lesvos and Comaigvern nifiered a igrvfieans amas
of years ago. In cider ta diaw aline under the inuay Gadsed by previous warians of Hedizon did tieat
postinasters whe hue heen llected fairly, the SGhome will out apply the laws off Ezailation dr tine hase ie
Stsamessment of the Shonttail Lowes ar Cansequnnts} Loizes.
arial Lave wweruiel net
ebaquential Lose (
at Loss nines Rave been rwasiaially’
e
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BES. Rat Ofion'ssghts to vely on
de the Scher (lndhuirg in3y
Rosclution Process) ar
ert of limitation ce time bar ot
fi
nvestigges and avis
tg bo agrees in reapact of each appleane. that dene will not punter Lanitation,
dthe Scheme ta the date dei wi applicant ceceives their
Port. Othhoe ts therefore with
patpuset froin tha date th
offer lenees.
3S, Presentation of the Concequential Lost outcome:
ASL. The Scheme wil presertits Consequential Loss outcome ty the postmaster in eleat swerinct mannes
Siting, out indoimation sufciaet to aRow th posting vo. unductimid Bis basis Fer tha conclusion
reached bi the Scheme in reipart of each tyee of Itka comgrding thé Consequential Lois claim. Irvwll ales
proulde copies of the key supporting docurentstion mlled upon.
4, The High Level Process
#2. Subtiasion ofa Consequential Lowsclaie
411 hug lorthe posmastec to pre
f evidence te 8
foliguring a request from Fox Ciitce setting out in derail: the wyidenoe requined for auch head of bares:
#12, What e capable of being claimed ay a Comseduventigi Loss. slang wath the hivel of avidince raquirdd ts.
iment the applicable legal wees, wll dhiperud on shee Yacts of gach cuce. The per tinuster vole expliiy ira
rich dared os possible:
a} the partioutar toss being efairmedt
‘B}: the specific amcumt of inst tang clined:
ow tha-ddes wes cateued by a Hovis Shemtfali and
3}. the temorable maps the poetmarer 10k to reduces this lo, and the mmpactthase srepe had:
42. Astestonent ofa Consequential Lane cla
AZ: -Cosnegueential Laer chains:
be aieessed against the established ley pncipter ant cart at paragraph 3.3,
application a this prirutpshes thus Pace wall abn comeader alvat iy fair all
23. Pthe Scheme comveher t howmations may be suaiiatiie ts thy: postmaster whinh acu oles thw,
asesemental thet Sai ot Consequential Lows, the Srhemir wil Sroacowely Gomacr the pocmaster and
aqqier tat this inkocenation be provided we
2d. Wehete ren dye tities seen yetrnt tea 2. pared witneocst. ot beset, fear, emsineaysio: wolnevee
cnt pioperty Valowions or tarcnsic accountatiey analyse isroquited:. the ploamanter may request
that Post Office ssimburne the femerable cosiiof the passtmaster obalning that hw dotymentation,
Paseo citi
425: Whore the Fn
8 wit ¢
s that ae sat pie appreavied
cemaielers that t-eeqaites expen insimance in aidlee ts make &
4. Diswte Resobytion Process
431 ¥ pevtmattent.ne disanihed whhithe muteome of their claims follorniing theamenmant prowess, the
Schame’s Duopine Resolution Pracess shall applyat et out i the Schaie'y Terms af Referee
5. Types of Loss
81. Then
is Wo orhaws
lu legal tests a
however, ert
should sew
of the thes if fass that can bo claimed ai Commoqueritial Loss (astwmning they mect'the
‘ating teat adcitional fossas claitied mist be clearly inked back Gra Hovaat Shortt’
examples aoe detaited beldw aliag wah examples of the types of evidetice that postmasters
te support their claims for Consequential Lens
aS
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8.2. Lowaof earings
cima with Past Offion ova wrongfully
32.2. This wall nvageite wvides
is Habaly anny tahun eafertnatien Fis
Jon they hold evidencing their sus
@}terminavion fetter
Be cobtemperanmtce cbite
that atherwine ther would hive conti
A) average iorihly axons io vuevniny
tefminaion, and
i] vke postmaster was.s
ottmiister wos so reveingy
imine earned theresleer:
5.3. Loss of pratite
cost of any additional meas
for exemple
by
4
1] _businwss plans Qhisegsiesl and fivecast)
‘} tmamagementintormation thisteeecal and lovestadt) anid
gl relevant comespondenor
5.4, Loisof property
biccrfall. the peisaenrst
SUL Has ther F alorinn
wie!
$4.2. thoster forseck a claim 00.6
comemipgreneter. that the: Hor
‘ebidetrce GF the alum of the lous x
worttnlt fa
af an explanation at to Why the aztet eas sold
bh} ielexent covresbandence
S21. THis may eelete to lass of eating: during pedod when the pastminde
ptulussily wuntemparanaous, that the
ct lerminaiad visthout duticient notice becauie of 5 Horton Shortiall: Rost Office will take
d}_remunesation inlgomation fer the period of suspension and the perlead belare/atter the
the posindstel ramedy to provide @ céldisatinn showing bidet
s thay oherwin weld have retained, adiain for ©
suneestul che postmaster wil need to panide evideane, preferably
sd 1 tu, lor nail
sponded or where the
sited bacaierel a inizion Shisietall
manter wees sunpencdud fad
coven tecards but the pelrinavter sould
srision Of Tetmnination: rekit
vspensian,
détide botany gostensitie anal Pow Ottigd:
dence asic why ine postmaiter's contract wat wronglully terminated ard
wed aha perdrnarter
ninatien, ae explanation an te why thenutice given te the poxmaner by Port Ofice
ti ance bey clalned tas been quail
aly his reve of am ansirt (ep aiphapwerty} at a
iavisequential Lots may be avatablé,
aed the dispoval, as well yx
oh decuenants relating’ ta the pucchive and sale of the ant:
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4) evidence of the valve uf the swet (histods and cucrenth and
A) arty totewark sexbamting documemation:
5.1.3. The postmaster needs te-provide a calralation showlng how the amount being claimed haybeon quanvided
SS. Loss of oppertunity/iess of chance
SAL The huss of an opportunity we puree & course of ecvoe ahat fia vesulted @ financlal palm, swichas
expanding the busiriess. which die postmaster would haiee pursved if not for. the Horizon Shortfall may be
<dhaimed as « Consaquviist tis.
$5.2 for there claims. scowl be secastary wo submit evatunce to darsonstrawe a specific oppertunty. come
of action that the postmaiter was inwate of atthe cane and had intesided to puteue but woe prevented from
‘dsing sodue te the Horigon Shortfall.
Sika Thee will require evidiewe: preferably contemporaneous, that the pestramer was.awaree Em. appertueny
“atthe time bb aroee.und stoned to-gor
money put towaids repaying a Hocingn Shortfall cand hawe teen invested cr whist muty have bean dene
Stet for the Hodiinn Shortie ae Unithely eirrutced: Ainy cline shoutd therefore be sccdmpanisd by
evidence: such as the following:
A} anidenee thet am eppertunity te lines enistedd,
1b) avidenoe that the investment enooreunity wa being actively considured and wat liealy to be pursued:
€}: weidinoe detsseserating hue tie ining tes inven vans eiiuse
ay ilar inter serivig aeversts <a this fact thar thay wold net ha chatthe! furwits voaval daranilaes of
the opportunity}
dp evideriee of what the postmisten’s Enancial position wile hase heen but fa the Horan Shiiefat
2) expected costs ain tiniefrasne for ininestenant: and
1 weidence if pi ‘ny on the investeneny
Sa: The portmanten heeds topmovide a caiculition thowing how the amount being datnad hay been quantiind
86. Penahies/goneral ar inereased casts of financing
S.b4” Penalties ov general/incrnasodoaits olf inancing -asia snauit-ad the boris Shortfall. may be recoverable
jog alcitional leancarcanguoneit fees! ¢ she poctourstey can provide wyichunce to chow thas ae
Harized Shortfall caused the penaky or increaad coa of krancig.
82. The ial viquiny evldenne, proferatily isintumporsngous, of the puifpons.of the Reideutig dine wheat the
posimiastes's Hrancial pesivion would have beon but fer the Nycaan Sthontall. rhe pommanar aéges that
‘the finance was taken oul at less achcartageaus rater thas 8 woud otherwive hive bere as a meauilt of the:
Hottzios Shortfall ley will nowd vo prowidw evithenie of when thw! frame wis tuben outiwed that they had
been tuened dows fer wiher products aeriore favoinable rales,
S62" The postmaster needs topeavide a calculation showing haw the amount being claimed fas been quantified.
587, Bankrupicy/imolvency
SIAL. Loses sullted 4 the permite undecwuen bankruptcy orimalwency piaewiadiigs at arnitt of aHoiiaon
domiasy be claimed as 3 Covtoenoritiat Logs
B72) for sucha claamta he eyecnsnhul the peatmaster will have to provitde evidence, preferad!
eonlumporicein, thie they wee burkrupted/declired inoluert (as appropiate] de valve af Cae
ers claimed and that dhe kankrupicy/ incelveney was Bus: wo the Hanzen Shortfall athiey than eeheer
intervening events/pentiral finaneint hardship fother facies}
57:3. The types of document that the pasimantes should prowide with their claim is ax foliaws
a) nopy-6f Bankrupkey order or IVA documentation:
bd} copy af notice df banksuprey in apprapeine sewspagien
O) linancial/accouining evidence te-derontrate thar the Morigen Suaetfall wai the raadbe For the,
bariktupiry/insaivency wg
Uae stat
5
a7
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iL acon,
Sie casts Ries: (f cal anid hotest)
(iv. busines plans flustunical and Foricus
-y managéenieti infinmation {historical sid forecant) and
vi detalles al cooditans st Bie ting of bankruptey/neclvency:and
@ ithe binkruptcpfinnalvendy proisins hat conchidhed, etait of gaymenis mada to-credstors
8.74, The postmaster sted to provide a calculation showing how the amaunk being claimed hus been guarted.
6.8. Legal end professional feos
BBL. Fees mouted in srelation to dealing with ab Shortfall at
srecoedings or ordtestionsl advice about restructuring the postmaster’
Sleise note that this’ separate 16 snip lagal and professional fee
appbication th the Scheme:
ia thos Hes pastnasters sheold geareide gides
pretnuably conténipiotuncoin, of
i yas ongaged (noting that perstmasters should aveid peawiciny, am
vice they have tecelved usiest they conkim they are hapoy 6 veadve prévdoge ever thar
legal advice}
itv af the engagement fincioding whuther the engapernert was by the pustinastuy o a thlid party)
and
<] the profeusional’s fees being Geurred and paid ty the pustmaster (eg. avoie/recns#!
BE. The postin nalidi te prewide a Calculation’ showing Now the stmount boing claimed has bees quaniilied
SY. Stigmaydamage torepotation
585. Where's pontimastey hes ibcurred a financial toss 4 4 sean of damage thls roputation aca sesult of «
Henican Soetfall they inay be vequental Lass
ction taken by Post Office ih tight oF ths Horizon Shortfall
eratters became known to thers and vty the damage to the
cab tose
potinaiter's ripotation sauved fr
54.3, The types cl Branca loss carsad by damage to reputation could include
as aredult of they
pire 03 a cml of the
8) evideraw thar conemess mapped seppoitieg the pose
Horizon Shortfall,
S04. if thw pouumenten claies-thar thuit botiness sdlored & domveturi ii
ropuitatidy. they should previde capiies of beuiness acco!
‘Seoaiun ter others canitunily
iia is avemete oF the damagie to thoit
is hotere and afior the Metizen Shortiall bexone:
S95 The pournamer noads 12 piuviele's calevlanan chewing haw the answnt being claited hay boon quantified.
10, Personal injury/hatassenent
304, Portetas
§
rathar than through s company] say
ar harassmwte-theiy have affenial a sill wh a
injuries as well as pryehtatiz harm
whe themsibves bald 2 direct contact with Post Of
able 1a daira Camsexgunritiel Laws fo paersearea
Horiion Shorfall Rerssnal injury can inzluda physic
SUG Thi wid require evedence: pred temgnrangaus, thatthe personal jury hansen was caused
‘by the blacienn Shuntfall. Postmaster should provide the following kiflormatien wher making a claim fer
perstinal injuey Pharasariet
ind Gexcription of their injury avg {ih hed sueeptennein they Have wxpanrliencedk {ii} enivdiciat
treatment they have received: fill any expentes/brtancial {ames they have sullarad: and isthe olfect
of their injury,
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< 4 - Application Form for potential Claimants
23
Have you experienced any other losses that
are divectly related te the alleged shortfait(s) in
respect ef which you would like to claim? I
yd
r thy ateged fo
The god
iow the fats arse as “
jeged shortfall arnt
he Ath
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©
Appendix 5 - Extract from Bates vs Post Office
545. The problem with the Post Office witnesses generally is they have become so
entrenched over the years, that they appear absolutely convinced that there is simply
nothing wrong with the Horizon system at all, and the explanation for all of the many
problems experienced by the different Claimants is cither the dishonesty or wholesale
incompetence of the SPMs. This entrenchment is particularly telling in the Post Office
witnesses who occupy the more senior posts. When even a Post Office auditor, Mr
Longbottom, attempts to go beneath this veneer, properly to investigate an unexplained
shortfall, and finds that he is not provided with the documents he considers necessary,
very considerable doubts arise about the approach adopted at the Post Office to its
overall control of information.
548. Unless I state to the contrary, I would only accept the evidence of Mrs Van den Bogerd
and Mr Beal in controversial areas of fact in issue in this Common Issue trial if these
are clearly and uncontrovertibly corroborated by contemporaneous documents.
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Appendix 6 - HSS Application and CL Inquiry Observations
@
POST OFFICE LIMITED
HISTORICAL MATTERS COMMITTEE
HSS Application &
Consequential Loss Guidance - I Meeting Date: I 16/02/23
Q24 Inquiry Observation
Title:
Workstream: I HSS Version: 1.01
author: Simon Atkins Sponsor: Ben Foat - Group Legal Counsel
Input Sought: Decision
Background: In light of Sir \Wyn identifying a potential issue regarding the HSS application pracess,
HRC is asked to:
* consider the analysis conducted on HSS applications and the potential actions POL could take
prior to Phase 5 of the Inquiry where this will be revisited:
* agree the recommendation to not take any action in response to Sir Wyn’s comments that early
HSS applicants were disadvantaged by not having sight of the Consequential Loss Principles
until Oct 2020 before applying.
Previous Governance Oversight
16/09/20 POL HMC approved the CLG, as part of that sign off it was agreed to communicate the CLG to
existing applicants. To mitigate the risk that claimants may not have been clear on claiming CL in
addition to Shortfalls, this was publicised via the HM website so visible for new claimants and also sent
both by email and post during October 2020 to those applicants who had already submitted a claim at
that point.
Executive Summary
Inthe August 2022 Interim Report Sir Wyn commented on the process of applying to the HSS,
noting that the Scheme application form was ‘unclear’ regarding consequential losses and that
POL’s guidance (the Consequential Loss Guidelines (CLG’)}, was published in Oct 2020 (4-5 months
after the Scheme was launched, after its original closure date and only c.2 months prior to its
‘extended closure paint) meaning that ‘very many/ applications had already been made’ without
that assistance. Sir Wyn commented ‘in my view, that was a flaw’, and therefore was not'user
friendly’.
e@ At the 8/12/22 Inquiry hearing "Compensation Issues Hearing’, core participants (Hudgell and
Howe & Co) made speafic reference to a small number of example offers challenged by them to
include adcitional HoLs and which were subsequently increased, highlighting this issue.
* Sir Wyn stated he intended to examine that issue in Phase 5, which is not due until a tbc date in
2023, (and only Phase 3 up to 10/3/23 currently has a confirmed timetable, Phases 4 and 5 are the
at the time of writing). Whether this timetable is accelerated as 2 result of recent hearings and
submissions is currently unknown.
* This paper summarises POL’s application process in the context of the CLG and the further
opportunities throughout the HSS e2e process to mitigate Sir Wyn's concerns that it was flawed. It
also considers both the narrative which explains that approach and the MI available to date to
support that.
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1.
2.
bia
S
iThe MI does not suggest that Sir Wyn's concerns are of significant detrimental impact to HSS
claimants to the paint where POL should consider any additional mitigations in advance of the
Inquiry Stage 5, where Sir Wyn has highlighted he intends to revisit this issue.
The recommendation is that no pre-emptive action is required, as there doesn't appear to be any
significant evidence this has adversely impacted claimants when the whole e2e process is taken
into account, and the consequences of any action in this regard would be a significantly
undermining threat to the credibility of the Scheme at this late stage), but that this paper is
revisited in late Q1 2023 to refresh the analysis (with the benefit of HSS being further advanced
and Late Applications also in progress) in order to provide a substantial Inquiry submission to
counter Sir \Wyn's concern.
Report
POL launched the HSS in May 2020 - the first application was received on 6/5/20.
The HSS Application Form contains a structured list of questions including Q24 ‘Have you
experienced any other losses that are directly related to the alleged shortfall(s) in respect of which
you vould like to claim?" which was intended to prompt applicants to also claim for non-Shortfall
losses, i.e. consequential losses. The criticism in the Aug 22 Inquiry report, noting ‘reservations
about how Question 24 would have been understood in the absence of guidance as to its meaning’
implies that this will have impacted what was claimed (and further, potentially, accepted).
POL published its CLG on 1/10/20 and also wrate to all claimants who had already applied at that
time with the Panel ToR, and CLG.
There are three parts to how POL could respond on this issue:
a. the narrative of POL's approach
b. the outcome analysis seen on the HSS to date — considering that $1% of Claimants’
applications were received prior to the CLG being made available but equally now >90% of
offers have been made
c. actions that POL could take - with careful consideration to their non-trivial
consequences.
It could be argued that 4a and 4b represent a reasonable position to take in response to this.
criticism, without the need for further action.
There are 4 opportunities for claimants to claim for non-Shortfall losses:
« At the application stage — ai! claimants
«To supplement the application prior to POL assessing it /' at any time pre-Panel (particularly in
the context of the CLG being published and communicated to claimants who'd already applied)
- all claimants
« Inreply to POL’s RFI - 83.5% of non-DM claimants (who applied pre-CLG publication) were sent
an RFI
* In response to POL's offer - al! claimants
POL's approach:
6.1 Nat
rez
a) Application Form - The HSS application form asked a very direct question “Have you
experienced any other losses that are directly related to the alleged shartfall(s) in respect of
which you would like to claim?" to invite claims for CL other than shortfalls.
b) Communication of CLG - Despite publishing the CLG after most claims were already
submitted, POL did send the CLG to claimants who had already submitted an application as
soon as it was published - anyone belatedly understanding they could also claim for CL or who
then had a better understanding what types of CL were relevant could have supplemented their
claim at any point prior to offer and this infarmation would have been used to assess the claim
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c) RFIs - POL has sent requests for information (RFIs} to claimants prior to assessing their claims,
particularly where claims were unquantified, unclear or where the information provided invited
further clarification or detail
d) Panel - when the claim is assessed by the Independent Assessment Panel (IAP) prior to
recommending an offer, they have a discretion to ask for further information if appropriate,
which they have done on occasion
e}) DRP - when the offer is made, Claimants are able to dispute the offer if they don’t agree with it.
This includes the opportunity to provide further clarity on Hal's already claimed, but also
introduce new Hol.'s not previously submitted, The Dispute Resolution Process (DRP} makes
provision for this, and for claims to be re-assessed against the IAP Claim Assessment Principles
(CAP), including being returned to the IAP for re-assessment if appropriate - something that
happens specifically if a new CL Hol is introduced.
POL's approach to the DRP, (specifically, Post Offer Principles, Principe 3.5} does cater for the
exceptional circumstances under which POL would consider re-assessing a claim, one of which is
‘the claimant was unawere Head's of Loss could be claimed (e.g. the application was submitted
prior to scheme website being updated)’. Also nating that in practice, POL hasn’t made any
distinction with offers re-assessed regardless of whether the applications fell before or after that
point in time, none have been refused the opportunity for reconsideration on this basis. This
process was not defined or active at the time the CLG were published, but the DRPs provision to
accommodate additional information (including further HoL not originally claimed) is a further
mitigation against claimants potentially not clear on the scope of HSS claims at the time of their
original application having a backstep opportunity to add further CL if not already taken prior to
an offer being made.
f)} EE Opportunities - so, while the initial application process could be criticised for the timing
and chronology of the guidance provided, there are numerous steps in the HSS e2e process
where the claimant could have supplemented their claim if they were unaware or unable to
understand the opportunity to claim for CL at the outset
Late Applications- mincful of the comments made, when POL announced that it was taking
late applications in Oct 22, it amended the appropriate section of the application form sent to all
those whe had expressed an interest in applying, to further signpost the CLG (‘Before
completing this question, for further guidance please refer to Appendix 1 (‘Consequential loss
principles and guidance’).
2
Counter arguments that may undermine the above:
h) DM Approach: Due to POL taking a de minimis approach, SFO claims under the DM threshold
would have had a shorter window to proactively send POL more details and were typically not
contacted for RFIs. However, the sare opportunities exist for the DRP process to accommodate
this.
i) HSS Design / Legal Support: The HSS was ‘designed to be simple and user-friendly to avoid
the need to incur casts of legal representation’ (HSS Q&A) and therefore (pre-offer in particular)
ne provision was made for claimants to incur professianal legal assistance to make out their
claim. For claimants who were unsure about CL (and Sir Wyn does highlight the need for HSS to
be ‘user friendly’) it could be argued that this assumption and the lack of legal support, while
consistent, could have been a disadvantage to some claimants, exacerbated by the lack of CLG.
This has been mitigated by a number of opportunities throughout to elaborate claims. While
legal assistance has been extended at offer stage and in DPR (‘reasonable’ legal fees}, this has
only applied fram Q3 2022 onwards past the point where the majority of HSS offers had been
made and accepted.
6.2 Gutcome Analysis:
As at 4/11/22 POL had 2419 claims im the HSS - 91.5% of these were received prior to 1/10/20
when the CLG were published.
a) Application Profiles Pre/Post CLG Publication receipt dates
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[Ciaime eeneived date woe 1/20
There is a difference in the number of claims where Claimants added any other Head of Loss
(HoL) pre and post 1/10/20:
yer
The gap between claims including CL received pre/post CLG two looks stark at face value {31%
vs 17%) - but is distorted by the fact that 92% of all DM claims were received in the first 4
months (92% by August 21) so the receipt of DM claims had also already tailed off significantly
1 month prior to CLG guidelines being published - only 10 (or 1.3% of DM claims) were
received in Sept 20 for example. In other words, a very similar picture would exist if the lines
were drawn a month prior to the CLG being published.
b) RFIs
eae Fetters ERtigeard I SitsRotuved I Wot Brig rela
[a it ao &1
(se iss aa mS
(ost) aaa = Dtificsns I Aeisbares I Nat ePrectumed
EY) ise I 33. t 23
Fy #33 ecto stiches * I 2a EE xh wae
The RFI rates between pre- and past-publication of the CLG are slightly different, but not
dramatically so.
*Some recent claims (split claims belatedly created as clarity on the claim substance was
established, plus some dissolved claims where eligibility status recently changed) are still im the
pipeline and so RFI rates for ‘post’ CLG publication claims may rise slightly. It could be argued
that the lower number sent/received for those claims post CLG is a result of those claimants
making fuller/more complete claims with the benefit of the CLG guidance, but equally the lower
% of returns vs sent (both cohorts) also suggests that claimants have provided all the
information they have available at the outset anyway.
¢) Offer Outcomes
For those claims offered, the table below compares and traces the reject and acceptance rates
and shows minimal differences:
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The % reject rate for claims induding CL received post CLG is marginally higher {14.7% vs
11.8%) but not dramatically so.
The % accept rate (for those offered) is marginally lower (74% vs 66%) but the post-CLG
claims also have more offers yet to receive a reply which could balance that out once the lag
time for later/more recently communicated offers is taken into account,
For those rejected offers vs RFIs, again there is no significant difference for claims where the
offer has been rejected, even after the claimant was asked to provide further information:
Pre-CLG: of those rejected 130/150 had an RFI: 87%
Past-CLG: of those rejected 16/17 had an RFI: 94%
Non-DM Claims without additional HoL
Of the Non-DM/CL claims, some are SFO claims — 443 in total. However of those offered the
reject rates are lower than the overall population. Pre 1/10/20: 373 claims made were SFO, but
above DM threshold. Only 22 of those offers were rejected - a reject rate of <5%, which is only
slightly lower than the reject rate for DM claims. That doesn’t suggest claimants making more
substantial SFO claims but not including other consequential losses were unhappy with the
outcome of the process.
¢) Quantum & Quantification of Claims
ua Fa iv PG Claim verge FOL
282 1532 399 264 aaah
Fred 2 18a,
22 ron » vate asi
mA G4 163,
The average PQ claim value post CLG is less than those prior, the average FQ claim is almost identical.
There is nothing in these numbers to suggest that further/more significant claims were triggered by
the publication and communication of the CLG.
¢) Rejected/DRP claims — and additional /nmew CL Hols
As of 4/11/22 37 claims in the DRP had added a new Hol and typically these then are re-submitted
ta Panel for re-assessment.
Of these that have completed that cycle, all have been offered an increased settlement amount-
ranging from an extra £1k to an extra £66k once the additional CL dlaim is taken into account.
As at 4/11/22, 12/37 had completed that process and the remainder were being reviewed/ awaiting
IAP reconsideration.
This shows that - for whatever the reason — the HSS is able to accommodate additional claims for
further HoLs that may not have been made at the initial application. Whether or not the claimant was
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unaware/not clear on what or how to claim for consequential loss at the outset, that is not a barrier
to their claim being adjusted later in the HSS €2e process.
A.smail number of examples falling into this group were quoted at the Inquiry by Hudgells and Howe
& Co, highlighting the potential for claims to change significantly as a result of challenges to the
offer/disputes introducing new information.
6.3 Actions that POL could take:
a) No further action & submit a response to Inquiry at S5 setting out POL’s position
Whilst Sir Wyn's observation is not an unreasonable logical hypothesis, there is a strong narrative
response (supported by data from within HSS) that doesn't suggest any strong evidence supporting
Sir Viyn’s observation.
‘Also noting that for the launch of the Late Applications cohort, the relevant application form question
contained further signposting to the CLG guidance to ensure daimants were aware to make reference
to that in making out their claim — in essence, what Sir Wyn suggested should have happened on
HSS.
6) Consider treating pre-CLG publication claims differently
Those claimants applying pre-CLG publication were sent a communication and the CLG guidelines
when published. Ail claims have followed the same process, and all claimants have been treated
equally depending on their characteristics ~ the only difference is the point in time they were made
aware offreceived the CLG guidelines.
eS \What could POL do differently?
6.4 Potential Actions for POL to consider Considerations
a) Re-oonfirm somehow that the >90% of I As per the above, the approach POL has taken
claims made pre CLG publication don’t I has meant that claimants have already had
want to reconsider their claim? multiple opportunities post application to
supplement their claim.
b) Consider re-visiting daims made pre-
CLG publication without any CL element I Acceptance rates at c.97% for DM claims and up
all DM claims, all non-DM SFO I to c.74% for non-DM to date (lowered by lag
is, which would represent c,950/ time of offers still being considered) do not
1s)? immediately suggest there is any reason to do
that- especially taking into account the backstop
of the DRP process allowing further CL Hols to
be added.
Additionally, the consequences of POL taking
any course of action to undermine the full and
final settlements awaiting acceptance/resolution
and those already made (and settled) would
represent a significant potential to undermine
the credibility and integrity of the HSS as a
whole,
Financial Impact
Of each of the above options
a) No further action — no financial impact
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b) Consider treating pre CLG publication claims differently -this is not quantified at this
stage, but petentially would be of significant materiality.
Risk Assessment, Mitigations & Legal Implications
1. Assuming Sir Wyn doesn't change his intention to revisit this topic prior to S5 {likely to be Q2 2023
at the earliest) there is no immediate risk to consider or mitigate at present if the recommended
approach is favoured. At the 8/12 Inquiry hearing, core participants encouraged Sir Wyn to produce
anather interim report and recommendations (not specific to this issue but if adopted would assume
this issue may be included) so it may be that this issue is addressed by the Inquiry process earlier
than planned.
2. Assuming Sir Wyn dees re-visit at S5 there is a risk POL is criticised and asked to consider remedial
or supplementary actions. However, he also notes he will need to hear evidence to form a clear
view: [15/8 Report Ref 145, ” Whether the failure to issue the Guidance at the proper time had the
effect of causing applicants to omit legitimate heads of claim can only be determined after hearing
evidence. No doubt that issue can be examined in Phase 5 together with any other evidence tending
to show that applicants failed to present all their legitimate claims for whatever reasons‘], so it’s
not going to be possible to gain a clearer sense of how this might play out until Stage 5. The
mitigation of that is in essence, the main consideration for this paper. The recommendation is to
do nothing, but there is a risk to be accepted that at SS POL may be encouraged or worse,
instructed, to take action. However, there is no clear evidence, as set out above, that POL should
consider second quessing this and taking any action over and above the stages in the e2e process
that already mitigate all CL’s not being raised at the initial application stage.
3. Connection to the issue of Legal Representation pre-Offer & ‘Inequality of Arms’ criticism - both
Hudgell and Howe and Co make the connection to the fact that the potential lack of understanding
at the application stage leading to heads of loss not being claimed is due to two issues: i) the lack
of clarity and timing of the CLG publication; ii) but also that claimants were not represented legally
at this stage and they were disadvantaged by that. This is a separate criticism, but the two are
presented as connected. At this point in the progress of the HSS, POL's approach to legal support
post-offer enables SPMs to be legally supported to challenge the offers (as per the examples quoted
at the 8/12 inquiry hearing), but this is in effect retrospective support only. The associated risk
that POL only enabled further legal support towards the end of HSS is one that POL has accepted
already as part of that decision making process - some claimants now benefit from reasonable
legal fees post offer/dispute, some earlier claimants did not.
4. A supplementary risk was raised at HMC in discussing this paper (not directly relevant te Q24)
regarding the DM approach and if there are any potential issues about fairness and potential for
underpayments in particular. The inherent risk associated with a DM approach is that claimants
may ‘win/lose’ in terms of settlements — a risk accepted as part of the decision-making process for
DM in 2020. NB. HMC approved DM at £20k originally, but this was revised down to £8k following
POL Board oversight. The DM approach means that SFA is not undertaken for DM-eligible claims -
the cnly way to get certainty on the risk that DM claimants may have been disadvantaged is to
conduct SFA to validate the claim,'the way the claim has been quantified using HSS SF DM principles
— however this is mot recommended as POL/HM will then be in possession of a documented and
possibly alternative view to the DM settlement offer. This could be sampled but the same issue
would remain. Additionally, it would distract from the SFA efforts required to process the HSS Late
Applications and OHC claims. The HSS acceptance rates for DM offers do not suggest that claimants
consider POLs DM approach {albeit not publicised) has been unfair.
Stakeholder Implications
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29
Agenda Item 6.2: Consequential Loss Review
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UKG100049053
cohort.
Input / Reviewed By:
Next Steps & Timelines
6. Confirm HMC/HRC are comfortable with the ‘no action’ approach (No further action & submit a
response to Inquiry at $5 setting out POL’s pasition) — if so, revisit and refresh this analysis in Q1
2023 where it should be possible to re-assess the numbers from a ‘complete’ HSS offer position
and also compare any differences to the composition and progress of the HSS Late Applications
5. Given the progress the HSS has naw made (>95% of offers sent), any actions other than a
continuation of the existing approach taken will likely need to trigger engagement and negotiation
across all internal and external stakeholder groups {HSF, UKGI, BEIS, HMT)
Simon Atkins I Author Initial draft 0.01 [SA] @.01 30/11/22
Incorporated comments from CC G.02 02/12/22
Incorporated feedback from GH G.03 07/12/22
Amends past Inquiry Hearing 8/12 o.04 I 13/12/22
Amends to incorporate POL Legal review: gas I 14/12/22
Past HMC amends 1.01 07/02/23
Aaron Davey I Legal * Amends to v0.04 a.04 13/12/22
Victor Turner I Finance ** I Recommendation and approach have no WA
financial impact
Graham Programme I Review comments and feedback g.02
Hemingway I Lead
Governance:
*Mandatory Review Required ** If Applicable
Loe
yells
oe
eae
Historical Matters Committee Approved for I 18/01/23
HRC
wiamends
Historical Remediation Committee *y02.00 16/02/23
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