Review to scrutinise Post Office accounting system failures

The government is to launch an independent review into the outcome and lessons of the dispute between the Post Office and sub postmasters, who were wrongly accused of fraud over the faulty operation of the Horizon accounting system

It follows Post Office Ltd reaching a settlement of £57.75m in December last year to conclude a long-running civil court case brought against it by a group of around 500 postmasters.

This related to unexpected shortfalls in their accounting, which occurred after the introduction of Horizon in 1999.  The Post Office maintained that they were responsible for discrepancies in their accounts, while the postmasters said the issue were down to bugs in the new IT system.

A significant number of postmasters faced legal claims to return monies and, in some cases, were given jail sentences for fraud. Many lost their businesses and some were declared bankrupt.

The review will consider whether Post Office Ltd has learned lessons from the Horizon dispute and court case, and made the changes needed to ensure a similar case cannot happen again. It will also provide an independent assessment of the Post Office’s work to rebuild its relationship with its postmasters.

In a written ministerial statement, Paul Scully, small business and postal affairs minister, outlined the scope of the review. He pointed out that during a lengthy series of trials, the judge  identified significant failings within Post Office Ltd over nearly two decades, particularly in relation to the treatment of postmasters and in its management culture.

The review’s aim is to understand and acknowledge what went wrong in relation to Horizon, leading to the group litigation order, by drawing on evidence from the Horizon judgments and affected postmasters’ experiences and identify what key lessons must be learned for the future.

It will assess whether the Post Office Ltd has learned the lessons from the criticisms made during the trials and those identified by affected postmasters and has delivered or made good progress on the organisational and cultural changes necessary to ensure a similar case does not happen in the future.

The review will also look at whether the company has met its commitments within the mediation settlement, including the historical shortfall fund which was set up to compensate postmasters who had been wrongly accused of fraud. 

At the start of the Covid-19 pandemic, the Post Office announced it intended to delay payments under the scheme from 23 March until at least early May, on the grounds it needed to focus its efforts on supporting postmasters through the current health crisis.

Other topics for the review include whether the processes and information provided by the Post Office to postmasters are sufficient to enable both parties to meet their contractual obligations, and to enable postmasters to run their businesses, and whether the governance and whistleblowing controls now in place are sufficient to ensure that the failings that led to the Horizon case issues do not happen again.

Scully said: ‘The Horizon dispute and court case has had a devastating impact on the lives of many postmasters, and I have been deeply moved by the individual stories of those I have spoken to.

‘It is so important that a case like this can never happen again.

‘That is why this government is committed to establishing an independent review to ensure that lessons have been learned, and that concrete changes have taken place at Post Office Ltd.’

The terms of reference and the final timings for the review are subject to confirmation by the chair, who will be fully independent of the Post Office and the government. The Department for Business, Energy and Industrial Strategy (BEIS) said a chair will be appointed and announced in due course.

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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