Post Office blunder threatens hundreds of branches

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The Post Office is threatening the future of hundreds of small branches by demanding back-dated fees for cash machines that were not supposed to cost postmasters a penny.

Branches with the free-to-use ATMs have been told they must repay two years of charges for using Post Office cash to restock the ATMs.

Some 400 branches in rural and deprived areas were encouraged to put in the machines in 2006 to improve access to free cash for the public.

The machines were offered free by the Royal Bank of Scotland's cash machine subsidiary Hanco, which paid branches a monthly fee for restocking the ATMs with Post Office cash.

The Post Office now wants these fees, which equate to 20p plus VAT for every £100 withdrawn by customers, returned. The letter from the Post Office admits there has been an error and apologises 'for the delay in collecting this money'.

The LibDem MP for Argyll and Bute, Alan Reid, said he was alerted to the problem by a postal worker in his constituency.


He warned that the unexpected charge 'could send more post offices to the wall' and called on Business Secretary Lord Mandelson to step in.

A Post Office spokesman said: 'Post Office Ltd is apologising to sub-postmasters for having to reclaim fees for providing cash for their ATMs, for which we mistakenly did not charge.

'We will not be asking for these payments in a lump sum.'

The landmark initiative to install the ATMs followed a Daily Mail campaign calling on banks to guarantee the public access to a national network of free ATMs.

The National Federation of Subpostmasters said it was 'surprised' at the Post Office's stand.