Dmitry Nikolaev - stock.adobe.co
The Post Office has warned its branch network about an error affecting some branches that means money received from the Post Office cash centre may not be registering correctly in the accounting system when scanned in by branch staff.
The error, in what is known as the automatic REM (remittance) process, which the Post Office has admitted, is a possible variant of a known error which has featured heavily in an ongoing High Court trial where the Post Office’s Horizon accounting system is under the microscope.
This is part of a dispute over allegations that computer errors caused unexplained losses which subpostmasters had to make good or were punished, including some being sent to prison. The plight of some subpostmasters, who run Post Office branches, was first reported over a decade ago (see timeline of events below).
In the last week of June, a subpostmaster informed the Post Office that on 17 June his branch had an £18,000 surplus after the REM process failed to register all the cash received. Scanning the barcodes on the cash pouches received from the Post Office cash centre should trigger an automatic process, which then adds the balance to Horizon.
In this case, a Post Office branch member of staff took £20,000 in cash for the branch. This was made up of £2,000 in £5 notes and the rest a mixture of £10 and £20 notes. The barcodes were scanned and a receipt was printed.
When the manager returned, he found that there was £18,000 extra in money in the branch, because only the £2,000 was added to Horizon.
In an email to then CIO and change director Rob Houghton the subpostmaster explained what he found when he returned to his branch and the events that followed..
“When I returned, I performed my usual checks on the main branch and did a variance check, [only] to discover to my shock that I had a £18,000 discrepancy,” he said. “I couldn’t understand what had gone wrong. All the cash agreed with what had been booked in, or so I thought.”
The receipt printed would have shown the discrepancy, but these are not always checked because the REM-in is an automated process and something that cannot be altered, so this wasn’t picked up.
A few days later, the subpostmaster did his accounts for the trading period and found that the branch was indeed £18,000 in surplus. He then contacted the Post Office branch helpline which initially advised him make good to cash, but when it realised this was credit and not loss, the helpline told him to settle centrally, which he did.
After settling centrally with the surplus, the subpostmaster was contacted by someone at the Post Office financial department in Chesterfield who said he had not booked the REM correctly.
He wrote in his email to Houghton: “I told this person that REM’s are automatically booked in by the system so how could the REM not be booked in correctly?” It was also suggested he had manually booked in the REM, but this is not possible without helpdesk support.
The financial department said he would receive a negative transfer correction for £18,000 and that when he next balanced he should settle the shortage centrally.
But in his email to the Post Office CIO, he said: “I am disinclined to accept this transaction correction when it hits my system until I have had a full written explanation as to how the failure to auto-replenish a REM has occurred.”
He added that he had discovered his was not an isolated case. “I have since been made aware of two other Postmasters who have experienced the same bug,” he wrote.
Under union pressure
This has emerged as a High Court trial – which looked at the Horizon systems alleged role in subpostmasters being wrongly prosecuted and fined for accounting shortfalls – is coming to an end. This is part of a multi-million pound group litigation order brought by 550 subpostmasters, which has already seen two trials with two more planned later this year and early next year.
The plight of some subpostmasters was first reported in 2009, when Computer Weekly revealed that the lives of some subpostmasters had been turned upside-down after being fined, sacked, made bankrupt or even imprisoned because of unexplained accounting shortfalls. They blamed the Horizon accounting and retail system for the problems, but the Post Office has refuted this.
In response to the subpostmaster email, Julie Thomas, operations director at Post Office, acknowledged the issue.
“We are currently going through a process of identifying the specific branches impacted so that we can contact them, we want to be absolutely sure that all branches are aware of the issue and can notify us if they believe they may have been impacted,” she said in an email response to the subpostmaster.
She said the cause is unclear and under investigation: “The impact reported is exactly as you describe; a REM pouch is scanned in and the amount booked in is far less than the actual cash in the pouch, so the branches impacted have seen surpluses. We believe the issue is in the Transtrack barcode system, but we know no more than this currently.”
She apologised for the way the subpostmaster was treated by the Post Office financial centre: “They deal with hundreds of transaction corrections per day and these are almost always to do with mistakes made in branches which need to be rectified by a transaction correction. But this doesn’t excuse their manner in assuming you were to blame and for this I apologise wholeheartedly.”
Under pressure from subpostmaster representatives at the Communication Workers Union (CWU), the Post Office sent a warning about the error to the subpostmaster network.
“We are aware of an issue with a small number of Cash Pouch REM barcodes, which we are working to resolve as quickly as possible,” it said.
“The issue means that when the barcode is scanned, it is only recognising part of the REM, which means it does not register the full value of the REM on Horizon. This may also impact Bureau services.”
The issue has echoes of an error revealed in 2015, known as the Dalmellington Bug, which has featured in the group litigation as evidence that errors could cause loss for subpostmasters.
Mark Baker, postmaster branch secretary at the CWU, said: “We have discovered a variant of the Dalmellington error that works against the Post Office and this time in favour of the subpostmaster. The Post Office had no idea about it. If the subpostmaster had done what the manual says and settle to cash, the subpostmaster could take the cash out of physical stock and keep it.”
“But that would be immoral and potentially illegal, so my advice to subpostmasters is don’t settle to cash, settle centrally.”
In November 2015, the CWU wrote to subpostmasters warning them of a problem with the system, following an incident at a Post Office branch in Dalmellington in which thousands of pounds of payments were duplicated for one subpostmaster.
If undetected, this would appear as losses when the accounts are completed, which would be the responsibility of the subpostmaster. The problem involves the process where subpostmasters transfer money from a core Post Office branch to a remote branch created to serve rural areas, known as an outreach, which is basically a branch on a laptop.
Timeline of the Post Office Horizon case since Computer Weekly first reported on it in 2009
- May 2009: Bankruptcy, prosecution and disrupted livelihoods – postmasters tell their story.
- September 2009: Postmasters form action group after accounts shortfall.
- November 2009: Post Office theft case deferred over IT questions.
- February 2011: Post Office faces legal action over alleged accounting system failures.
- October 2011: 85 subpostmasters seek legal support in claims against Post Office computer system.
- June 2012: Post Office launches external review of system at centre of legal disputes.
- January 2013: Post Office admits Horizon system needs more investigation.
- January 2013: Post Office announces amnesty for Horizon evidence.
- January 2013: Post Office wants to get to bottom of IT system allegations.
- June 2013: Investigation into Post Office accounting system to drill down on strongest cases.
- July 2013: Post Office Horizon system investigation reveals concerns.
- October 2013: End in sight for subpostmaster claims against Post Office’s Horizon accounting system.
- October 2013: Former Lord Justice of Appeal Hooper joins Post Office Horizon investigation.
- November 2013: 150 subpostmasters file claims over ‘faulty’ Horizon accounting system.
- September 2014: Fresh questions raised over Post Office IT system’s role in fraud cases.
- December 2014: MPs blast Post Office over IT system investigation and remove backing.
- December 2014: Why MPs lost faith in the Post Office’s IT investigation, but vowed to fight on.
- December 2014: MPs to debate subpostmaster IT injustice claims.
- December 2014: MP accuses Post Office of acting “duplicitously” in IT investigation.
- January 2015: MPs force inquiry into Post Office subpostmaster mediation scheme.
- January 2015: Post Office faces grilling by MPs over Horizon accounting system.
- February 2015: Post Office CIO will talk to any subpostmaster about IT problems, promises CEO.
- March 2015: Post Office ends working group for IT system investigation day before potentially damaging report.
- March 2015: MPs seek reassurance over Post Office mediation scheme.
- March 2015: Retiring MP aims to uncover truth of alleged Post Office computer system problems.
- April 2015: Post Office failed to investigate account shortfalls before legal action, report claims.
- April 2015: Criminal Courts Review Commission set to review subpostmasters’ claims of wrongful prosecution.
- May 2015: IT system related to subpostmaster prosecutions under review by CCRC.
- June 2015: Post Office looking to replace controversial Horizon system with IBM, says MP.
- July 2015: Campaigners call for independent inquiry into Post Office Horizon IT system dispute.
- October 2015: James Arbuthnot takes Post Office IT fight to House of Lords.
- November 2015: The union that represents Post Office subpostmasters has warned of a problem with the Horizon accounting system.
- November 2015: An email from Post Office IT support reveals a problem with the Horizon system and supporting processes that could lead to accounting errors.
- November 2015: Group litigation against Post Office being prepared in Horizon dispute.
- February 2016: Post Office faces group litigation over Horizon IT as subpostmasters fund class action.
- June 2016: Post Office chairman Tim Parker says there would be “considerable risk” associated with changing its Horizon computer system.
- November 2016:The legal team hired by a group of subpostmasters will take their case to the next stage.
- January 2017: The group action against the Post Office that alleges subpostmasters have been wrongly punished for accounting errors gets a green light from the High Court of Justice.
- March 2017: 1,000 subpostmasters apply to join IT-related group litigation against Post Office.
- April 2017: Investigation into claims of miscarriages of justice in relation to a Post Office accounting system has appointed a forensic accountant firm.
- May 2017: Hundreds of subpostmasters have applied to join IT-related legal action since March.
- July 2017: Post Office defence in computer system legal case due this week.
- August 2017: Campaigners submit initial evidence in group litigation against Post Office over controversial Horizon IT system.
- October 2017: Subpostmasters’ group action against the Post Office reaches an important milestone.
- November 2017: An end is in sight for subpostmasters’ campaign against alleged wrongful prosecution, which they blame on a faulty computer system.
- November 2017: The High Court judge managing the subpostmasters versus Post Office legal case over an allegedly faulty computer system tells legal teams to cooperate.
- January 2018: Forensic investigation into Post Office IT system at centre of legal case nears completion.
- April 2018: Criminal Cases Review Commission forensic examination of the IT system at the centre of a legal case against the Post Office has raised further questions.
- May 2018: Post Office branches unable to connect to Horizon computer system for several hours after morning opening time.
- October 2018: After over a decade of controversy, next week marks the beginning of a court battle between subpostmasters and the Post Office.
- November 2018: Case against Post Office in relation to allegedly faulty computer system begins in High Court.
- November 2018: High Court case in which subpostmasters are suing the Post Office has revealed a known problem with a computer system at the core of the dispute.
- November 2018: A High Court trial, where subpostmasters are suing the Post Office for damages caused by an allegedly faulty IT system, ends second week.
- November 2018: Post Office director admits to Horizon errors and not sharing details with subpostmaster network.
- November 2018: The High Court trial in which subpostmasters are suing the Post Office has reached an important stage.
- December 2018: CCRC may hold off subpostmaster decision until after Post Office Horizon trial.
- December 2018: Court case where subpostmasters are suing the Post Office set to span at least four trials and extend into 2020.
- January 2019: Subpostmasters’ campaign group attacks Post Office CEO Paula Vennells’ New Year honour amid ongoing court case.
- January 2019: Thousands of known errors on controversial Post Office computer system to be revealed.
- March 2019: Tech under spotlight at High Court in second subpostmasters versus Post Office trial.
- March 2019: Post Office considered Horizon IT system “high risk”, court told.
- March 2019: Post Office ‘lacked humanity’ in the treatment of subpostmasters, says peer.
- March 2019: CCRC watching Post Office Horizon trial closely.
- March 2019: Judge rules that Post Office showed “oppressive behaviour” in response to claimants accused of accounting errors they blamed on Horizon IT system.
- March 2019: A High Court judge heard that the Post Office did not investigate a computer system error that could cause losses, despite being offered evidence.
- March 2019: The Post Office legal team in the case brought by more than 500 subpostmasters has called for the judge to be recused after questioning his impartiality.
- March 2019: A senior civil servant asked the Post Office to repay public money it had wrongly allocated to paying legal costs.
- April 2019: Subpostmaster claimants’ legal team makes application for the Post Office to pay millions of pounds of costs associated with trial.
- April 2019: Post Office to appeal judgment from first Horizon trial.
- April 2019: The Post Office’s claim that the judge overseeing the case concerning its controversial Horizon IT system was biased has been dismissed – but will now be considered by the Court of Appeal.
- April 2019: MP questions government over Post Office Horizon case.
- April 2019: Government says no conflict of interest in trial despite Post Office chairman’s dual role.
- May 2019: The Court of Appeal has refused the Post Office’s application to appeal a major decision in the Horizon IT trial.
- May 2019: The Post Office has applied for permission to appeal judgments from the first trial in its IT-related legal battle with subpostmasters.
- May 2019: The judge in the Post Office Horizon trial has ordered the organisation to pay the legal costs of its courtroom adversaries, and refused to give permission to appeal a major judgment.
- June 2019: Post Office asks Court of Appeal for permission to appeal judgment in first Horizon trial.