Subpostmasters still in the dark about live Horizon errors

Months after a High Court judge tore into the Post Office’s approach to branch computer system errors, the organisation is not sharing details of possible errors with subpostmasters, who are also still having difficulty contacting the branch support helpline.

A recent system error at the branch of a subpostmaster highlighted some of the challenges the Post Office faces to regain the trust of the people who run its branches, trust that was lost after almost two decades of denial.

The recent problem, which saw a customer’s withdrawal transaction declined even though the system had debited his account, appears to be an error known to the Post Office, but which has not been communicated to subpostmasters.

A High Court case that concluded late last year ruled that subpostmasters were right in their claims that errors in the Horizon system could cause unexplained branch losses. The trials also saw the Post Office criticised for not providing a fit-for-purpose branch support telephone helpline and not sharing known Horizon errors with the subpostmasters who could be affected.

In 2009, a Computer Weekly investigation revealed that subpostmasters, who run Post Office branches, were being blamed for unexplained financial losses, which they claimed were caused by errors made by the Horizon retail and accounting system. The Post Office denied this, and subpostmasters were prosecuted for theft and false accounting, with prison sentences, community service, criminal records and heavy fines among the injustices they suffered as a result (see timeline below). 

Hundreds of subpostmasters took the Post Office to court in 2018 through a group litigation action to prove that the computer system was to blame for unexplained losses. They won the multimillion-pound High Court battle, which concluded in December 2019.

But now, nine months after the court settlement, in which the Post Office agreed to pay £58m in damages and promised to change its ways, subpostmasters are still in the dark about errors in Horizon. Meanwhile, the National Business Support Line, referred to by subpostmasters as the branch helpline or “hell line”, is still leaving subpostmasters with urgent requests for help, on hold for long periods.

Subpostmaster Mark Baker, who was described by High Court judge Peter Fraser as “redoubtable” during the trial, is branch secretary of the Communication Workers Union. He has been supporting subpostmasters who experienced problems with Horizon for many years.

During that time, while Baker has had experience of dealing with problems at other branches he has helped, he had not experienced a major Horizon error that could cause a loss or gain at his branch in the 20 years since Horizon was introduced – until now.

In Baker’s branch last week, he experienced an error that caused a shortfall, in this case for the customer. The error occurred when a customer tried to withdraw money from a building society account via the Post Office. Post Office branches offer banking services for banks and other finance firms in rural areas where there are no bank branches.

When the customer tried to withdraw the money, the in-branch Horizon screen reported the transaction as declined, but the customer’s bank balance was debited by the amount. “We have been aware of these for some time, through other subpostmasters, and examples are becoming more frequent,” said Baker.

He described the incident as a failure of what is known as the “three-handed handshake” in which the transaction has to be agreed by Horizon, the Link inter-bank payment system and in-branch.

“If one of those strands of communication fails, one of the parties is going to be out of pocket,” said Baker.

In the incident, a regular customer visited Baker’s branch to withdraw £400, but when they tried to process it, the screen said the transaction was declined.

The customer confirmed he had enough money in his account, so they tried again, but this time split the amounts. A transaction for £300 was declined and the receipt showed this was because the customer had exceeded his daily limit, although the previous transaction had been declined and nothing had been withdrawn that day.

“We tried for a third time, without success,” said Baker.

The customer told Baker he would visit a Nationwide Building Society branch to try to sort out why he could not withdraw the cash.

Baker added: “We tried ringing the Post Office twice, no answer after 20 minutes, so we gave up. We can’t keep trying and will wait for any errors that come back.”

The customer returned later that day and told Baker that Nationwide had confirmed that the Post Office had taken the £400. “He said ‘don’t worry, they gave me the money and said they would get it back from the Post Office’,” said Baker.

“When I went through all the papers when I closed, as I can’t do it during work hours, sure enough, the payment had gone through. I took the money out and put it with the paperwork because now I was over. But the Horizon screen was showing nothing.”

Baker added: “The cash is in the safe, with all the paperwork, waiting for Nationwide to do whatever they do through the Post Office if that ever happens. If the customer hadn’t have gone down to Nationwide and we hadn’t checked his statements, he would have been £400 light and would never have known why.”

The Post Office’s banking team contacted Baker eight days later. “They only contacted me because the building society had been on to them,” he said.

Baker said he was impressed with the specialist banking team contacting him, but pointed out that this raises questions. “It shows the Post Office is fully aware that this happens because they have a department set up to deal with it, but subpostmasters are not being kept up to date,” he said. “Most don’t know what one-sided transactions are.”

Asked by Computer Weekly why it does not alert the branch network to all potential errors, the Post Office told Computer Weekly: “We are working with postmasters on further improvements throughout the business and this includes operational and other communications.”

Former subpostmaster Tim McCormack, who has campaigned for the Post Office to release details of all known Horizon errors for many years, said: “What seemed to be genuine interest from the Post Office [nine months ago] has mutated into a lengthy delay, which gives rise to suspicions that there are errors they don’t want the network to know about.”

Baker received an error notice 10 days later which said: “A card banking transaction for [account] on [date] for £400. Withdrawal was processed but no funds were given, creating a cash gain in the branch.” The error notice was instigated by the Post Office banking team.

The error in Baker’s branch looks like a manifestation of something that forensic accounting firm Second Sight identified as early as 2013 after examining a sample of cases on behalf of the Post Office.

This is known as a one-sided transaction and it often happens the other way round, with the customer being given the money but the Horizon system not recording it, leaving subpostmasters down in their accounts.

When two systems are running together, in this case Horizon and the inter-bank payment system known as Link, four things can happen – both work, neither works, and the two options where one works and the other doesn’t.

These errors can be caused by telecommunications and hardware problems.

For subpostmasters, it is a huge problem when they give the money to the customer but Horizon does not record it, leaving them down by that amount. The customer is less likely to report an error that gives them money without deducting it from their account than when they have money deducted without receiving it.

Early in its investigations, Second Sight, which was commissioned by the Post Office to investigate accusations against Horizon, identified one-sided transactions and the potential for them to lead to unexplained shortfalls.

Ron Warmington, head of Second Sight, said: “Customers who get nothing for something are more likely to notice and do something about it than those who get something for nothing.”

Warmington said he strongly suspected that a substantial proportion of the historical shortfalls would be attributable to this type of error.

Challenged by subpostmasters and Computer Weekly over the past decade, the Post Office always maintained that there were no errors in Horizon. But during the High Court trial, evidence in court revealed that the Post Office and Horizon supplier Fujitsu had a known errors log, which documented thousands of known Horizon errors. But these were never shared with subpostmasters and it took a court case to reveal their existence.

Responding to Computer Weekly’s questions about changes it had made since the court judgments, the Post Office said a programme of reform was under way: “We are overhauling culture, practices and procedures throughout the organisation, forging an open and transparent relationship with postmasters.”

It said it was in consultation to “hear directly from subpostmasters about how they want to be involved in the development and execution of business decisions”. 

As regards the branch helpline, the Post Office said it had “restructured NBSC (now the Branch Support Centre) to enable issues to be resolved more quickly and efficiently.  In the majority of cases, our Branch Support Centre can resolve queries quickly and easily to the postmaster’s satisfaction”.

For more complex cases, the Post Office said it assigns a specific case handler to complete a more in-depth investigation. “The case handler will work alongside the postmaster and, if necessary, the case can be further escalated,” it said.

It added that design changes had been made to various transactions on Horizon, based on postmaster feedback.

As banks continue to close branches, particularly in rural areas, the Post Office is vital in offering services on their behalf. As closures accelerate as a result of cost cutting and the move to digital banking services, Post Office branches are likely to experience higher volumes of customers using them to make banking transactions.