Barclays Bank has announced it will pay up to £7.5 million in compensation to customers affected by a significant IT outage which lasted for three days, from January 31 to February 2, 2025. The outage severely disrupted banking services, with over half of online payment attempts failing due to what the bank described as "severe degradation" of its UK mainframe systems.
The incident had substantial ramifications for many customers, particularly as it coincided with both payday for numerous workers and the deadline for self-assessment tax returns filed with HMRC, causing widespread inconvenience.
Vim Maru, the Chief Executive of Barclays UK, expressed the bank's commitment to support those impacted, stating, "We acknowledge through no fault of their own, some of our customers and clients may have suffered loss or distress and inconvenience." This incident, classified as the 33rd IT-related outage the bank has faced over the past two years, has raised serious concerns about the reliability of banking services across the sector.
During the outage, Barclays customers were unable to access their online and mobile banking platforms, leading to frustrations as they could not complete transactions when needed most. Although customers could still use their debit cards for withdrawals at ATMs, the limitations imposed by the lack of online access left many feeling anxious and helpless. Maru reassured the public, "No customer will be out of pocket as a result of this incident." Barclays is making efforts to identify all impacted customers as part of their proactive remediation strategy.
The recent IT failure at Barclays forms part of broader systemic issues within the UK's banking sector. The Treasury Select Committee reported at least 158 banking IT failure incidents across nine of the largest banks and building societies since January 2023, leading to approximately 803 hours of disruption—equivalent to over 33 days of banking outages. This staggering figure highlights the prevalence of IT-related issues within financial institutions.
Barclays alone recorded 33 separate incidents, which have cumulatively affected around 3.3 million customers, leading to total compensation payouts expected to reach £12.5 million over the last two years. Other notable banks affected include HSBC, which had 32 disruptions and paid out £232,697, and Santander, which also saw 32 incidents resulting in £17,000 paid out to customers.
Dame Meg Hillier MP, the Chair of the Treasury Select Committee, addressed the grave concerns raised by these repeated outages, stating, "Losing access to banking services on payday can be terrifying for those living paycheck to paycheck." Hillier emphasized the need for banks to respond swiftly to outages and keep customers adequately informed.
With the recent incidents, customers are rightfully asking how they can secure compensation. Barclays plans to contact affected individuals directly about their payouts. Similar measures are encouraged across other banks as the trend of compensations for IT failures becomes more common.
People impacted by banking outages are advised to act swiftly by raising complaints with their respective banks. If concerns are not adequately addressed through customer service, recourse through the Financial Ombudsman may provide them with additional support. The Ombudsman is positioned as an impartial mediator to resolve disputes between consumers and financial institutions.
Maru's remarks about the need for compensation were echoed by others who share the view of addressing customer distress as part of banks' responsibility to their clients. Ensuring financial customers are not disadvantaged due to technical failures is part of restoring trust.
With several major banks experiencing outages over the past few years, the Treasury Select Committee is noticing patterns and trends. Findings reveal not just random occurrences but rather systematic issues within IT operations among major banking institutions.
What is clear is the structural challenges banks face with technology and third-party partner systems, coupled with internal software issues which have contributed to the outages. MP Hillier stated, "Even the most successful banks encounter glitches, highlighting the need for vigilance and improved response mechanisms.”
The latest disruptions have provoked calls for greater accountability within the banking sector, as it pivots to more digitally focused services. Transparency during outages, effective lines of communication, and timely compensation are all expected to be strengthened to meet consumer expectations.
Barclays has committed to maintaining dialogue with both customers and regulatory bodies, vowing to bolster their systems against future outages to avert similar incidents. With the stakes high for customer trust, the path forward for banks will heavily rely on how they address and rectify these systemic technology challenges.
Going forward, customers expect more clarity and accountability from their banking providers, no doubt aware of their rights to compensation from outages. The recent Barclays outage serves as both a warning and lesson for financial institutions about the importance of operational resilience and effective communication strategies.