Post Office pays £58m to settle IT accounting failures

The Post Office has agreed to pay £58m to settle a long running legal case brought by a group of sub postmasters who faced charges of fraud which they said were down to problems with a new computerised accounting system

A group of over 500 former sub-postmasters have been involved in a series of trials relating to claims that the Post Office incorrectly and unfairly held them responsible for accounting discrepancies, which they held were due to failings with the Post Office’s Horizon IT system, introduced around 2000.

The class action, led by six initial lead claimants, alleged the Horizon system contained a large number of defects causing shortfalls in their financial accounts, which led to some being jailed for offences including false accounting, fraud and theft, while others were made bankrupt.

They accused the Post Office of failing to provide adequate training in the use of Horizon, failing to investigate the cause of alleged shortfalls and misleading them about the reliability of the system, which was supplied by Fujitsu.

The litigation was brought by the Justice for Sub-postmasters Alliance, which maintained the Post Office has abused its position to unlawfully suspend, sack and prosecute sub-postmasters who were found to have shortfalls in their weekly accounting, including requiring them to pay back the sums involved.

The complexity of the issues and the length of time which it took for the case to come to court meant that the judge decided to divide it into several parts, to be heard separately.

In March this year, the sub-postmasters group won an important first step, when the judge gave a ruling on the nature of the contracts they had with the Post Office.

Now the group and the Post Office have announced they have reached a comprehensive resolution to their long running litigation in the High Court, following what is described as ‘several days of respectful, challenging, and ultimately successful mediation during which the parties engaged with each other in good faith’.

The Post Office has agreed with the sub-postmasters to a settlement package of £57.75m, to be divided between the 550 claimants on the merits of each of their cases.

In a joint statement, the Post Office said it ‘would like to express its gratitude to claimants, and particularly those who attended the mediation in person to share their experiences with us, for holding us to account in circumstances where, in the past, we have fallen short and we apologise to those affected.’

Nick Read, Post Office CEO, said: ‘I am very pleased we have been able to find a resolution to this longstanding dispute. Our business needs to take on board some important lessons about the way we work with postmasters, and I am determined that it will do so.

‘We are committed to a reset in our relationship with postmasters, placing them alongside our customers at the centre of our business.

‘As we agree to close this difficult chapter, we look forward to continuing the hard work ahead of us in shaping a modern and dynamic Post Office, serving customers in a genuine commercial partnership with postmasters, for the benefit of communities across the UK.’

The Justice for Sub-postmasters Alliance spokesman, Alan Bates, said: ‘The steering committee would like to thank Nick Read, the new CEO of Post Office, for his leadership, engagement and determination in helping to reach a settlement of this long running dispute.

‘During the mediation, it became clear that he intends to reset the relationship between the Post Office and its sub postmasters and put in place new processes and support for them, as part of a wider programme of improvements.

‘It would seem that from the positive discussions with Post Office’s new CEO, Nick Read, that there is a genuine desire to move on from these legacy issues and learn lessons from the past.’

Bates had personal experience of the issues with the Horizon accounting system. He uncovered a £1,000 discrepancy in his accounts at a branch office in Wales for which he could find no explanation other than a software problem.

Horizon showed an unexplained variance of over £6,000 in respect of Giro deposits, which Bates worked out to be the result of some Giro items of approximately £5,000 being wrongly duplicated, caused by an overnight software update. This was disputed by the Post Office, which asked him to pay for the shortfall.

Alan Bates and others and Post Office Ltd

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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