It didn't apply under CONGU (my suggestion). I don't know the figures, but having checked a few at the time we swapped over from WHS, the initial handicaps awarded under pre or post WHS were not a million miles apart. As such, pre and post WHS, new golfers will always get an additional advantage. Yes, we probably all benefitted from that when we started, but that does not make it right. I had a lot of success in my first year, but the snidy comments from long term golfers were difficult. And, they were right, I knew I was better than the 20 handicap I started with, and I won 9 trophies that year and ended the year on around 15ish I think. I played every comp as well, I think my first comp was a nett 60 and won by about 6 or 7 shots, after I had a lesson during the week before.
Also, after that initial success, it is hard for some to accept that they are no longer "competitive" because their time of being that rapidly improving golfer has gone. I've seen countless golfers join our club over the years, love the game, shoot crazy scores, win lots, etc. Their handicap finally gets to a reasonable level after a while, and so many of them just seem to fade away, and lose interest in the game. Perhaps that success comes way to soon, they peak too early based on the handicap they are given, and then their expectations become unrealistic for the long term?
However, the system could easily be changed. After 3 scores, let us say that a players best score differential is 0.0. Add no extra penalty and give them an Index of 0.0 (under WHS it would be -2.0 now). If their best score differential was 15.0, take 5.0 off and give them an Index of 10.0 (under WHS it would be 13.0 now). If their best score differential was 30.0, take 10.0 off and give them an Index of 20.0 (under WHS it would be 28.0 now). These are just indicative, but effectively increase the penalty as the raw index progressively gets higher. After 10 scores, once calculating the raw index, take away only half of the penalties above, after 15 take away a quarter and after 20 scores remove penalty completely.
So, instead of giving a player an initial index of 28, give them an index of 20. If they are a player who is rapidly improving, it will hugely help stop them scoring a ridiculously good score (maybe it will reduce their score of 46 points to 38 points). If their first 3 scores did actually represent their actual ability, and there is no sign they will improve, that will be reflected more within their handicap as they submit more scores (and actually encourage them to put in scores).
I suspect the above would have been harder to implement pre WHS, because there was no concept of scoring history. You simply had a handicap, and that number was adjusted once another score was put in. However, WHS does have concept of scoring history, and thus could be easily implemented to solve the age old problem of the rapidly improving new golfer.