Millions in compensation expected for customers hit by Barclays outages

Barclays is expected to pay millions of pounds in compensation for recent IT outages which prevented customers from banking, a new letter to MPs has revealed.

The lender said it expects to pay out between £5m and £7.5m to customers for "inconvenience or distress" caused by days of disruption earlier this year, according to the influential Treasury Committee of MPs.

The glitch began at the end of January and lasted several days. It coincided with payday for many and the deadline for self-assessment tax returns.

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This was caused by "severe degradation" in the performance of their mainframe computer, a large computer used by big organisations for bulk data processing.

It resulted in the failure of 56% of Barclays' online payments, the bank told the committee. To solve the problem, a software fix from Barclays' mainframe provider is "undergoing comprehensive testing".

Up to £12.5m, however, could be paid when all outages over the last two years from January 2023 to February 2025 are factored in, the committee said.

It would be by far the biggest amount of compensation paid by a firm in the last two years. Bank of Ireland would be the second, having issued £350,000 in compensation.

And customers don't necessarily have to do anything to get their money. Some will get an automated refund, while others will be contacted for additional information.

Outstanding unknowns

But Barclays was unable to say how many customers were hit by the disturbance, adding it was working to identify all those affected.

Higher instances of fraud are expected as a result of the outage, Barclays told the committee chair Meg Hillier. Reporting incidents can take a few weeks, it said.

It has already seen "some instances" where people attempted to take advantage of the incident.

The Treasury Committee is investigating IT problems at all banks that prevent or limit customer access.

A recurring problem

The nine top banks and building societies written to by the Treasury Committee had a total of 803 hours of unplanned outages over the last two years, they said, equivalent to 33 days.

These hours were comprised of 158 individual IT failures.

As a result, the bank with the longest outages was NatWest with 194 hours of failures.

The second longest period of services being down was at HSBC which logged 176 hours of disruption.

Why does this keep happening?

As part of their inquiries, banks said common reasons for IT failures included problems with third-party suppliers, disruption caused by systems changes and internal software malfunctions.

The responses were received before last Friday's online banking failures, which caused difficulties for millions on payday, but the committee said it would request data on the latest disruption.

Barclays' recent payday failure is also not captured in the numbers.

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