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The Post Office is to pay almost £58m to settle a long-running dispute with sub-postmasters and postmistresses.
It brings an end to a mammoth series of court cases over the Horizon IT system used to manage local post office finances since 1999.
A group of postmasters said faults in the system led to them wrongly being accused of fraud and false accounting.
The Post Office said it accepted it had “got things wrong in our dealings with a number of postmasters” in the past.
Sub-postmasters run Post Office franchises across the UK, which typically provide some but not all of the services of a main post office.
The group of 550 claimants joined a civil action to win compensation last year, but their complaint goes back much further.
They alleged that the Horizon IT system – which was installed between 1999 and 2000 – contained a large number of defects.
Some said their lives had been ruined when they were pursued for funds which managers claimed were missing. Some even went to jail after being convicted of fraud.
‘I’m in a daze’
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Jo Hamilton
Jo Hamilton was accused by the Post Office of taking £36,000 from the village shop she ran in a village in Hampshire.
She said of the settlement: “It’s one of the best days I’ve ever had. You dream about victory, but now it’s actually here.”
The £36,000 discrepancy in the Post Office accounts didn’t happen overnight, she said.
The way the Horizon IT system was set up, it would not let her open the next day’s business without signing off amounts of money in a balance period she says were incorrect – which were sometimes many thousands of pounds.
“It just kept escalating,” she said. “It was gradually dribbling out over a year.”
She reported the discrepancies to the Post Office area manager, but that manager could find nothing wrong with the system. Jo was then put in a situation where “you had to prove your innocence,” she said.
After a two year process, she eventually pleaded guilty to false accounting at Winchester Crown Court to escape a more serious charge of theft. She managed to keep her shop going for a while, but when her parents had strokes, she gave it up to care for them.
Jo found it difficult to get a new job due to her criminal record, eventually cleaning for people in her village who didn’t believe she was guilty.
“I couldn’t get car insurance,” she said, and had to go to a specialist provider with higher premiums. “I couldn’t be left alone with my grand-daughter in her classroom.”
She now feels vindicated, having fought to clear her name.
“I just feel like I’m in a daze”. Jo’s conviction is being reviewed.
The claimants were half way through a series of four trials when the Post Office sought mediation.
It could take several weeks for individual compensation payments to be worked out.
‘Important lessons’
The Post Office apologised to the claimants, saying it was grateful to them “for holding us to account in circumstances where, in the past, we have fallen short.”
Mr Read 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.”
Alan Bates, former sub-postmaster of the Craig-y-Don branch in Llandudno, and one of the lead claimants, said: “[We] would like to thank Nick Read, the new chief executive of Post Office, for his leadership, engagement and determination in helping to reach a settlement of this long-running dispute.
“It would seem that from the positive discussions [we have had] there is a genuine desire to move on from these legacy issues and learn lessons from the past.”
This is a major climb down by the Post Office which has made multiple appeals to try to see off the court case.
But legal costs were stretching into the tens of millions, so the price of losing at the end of this mammoth legal process could have been a great deal higher.
It’s not clear yet how much individual postmasters and mistresses will receive.
Lawyers’ fees have to be taken off, along with a charge from the litigation backer, Therium.
But just looking at the £58m suggests payouts could be in the tens of thousands and even higher for the worst affected.