Compensation in Millions Anticipated for Customers Affected by Barclays Outages

## Barclays Faces Major Compensation for IT Disruptions

Barclays, one of the leading banks in the UK, is preparing to compensate customers due to significant IT outages that affected their banking services. These outages have caused considerable frustration, and according to a recent letter sent to Members of Parliament (MPs), Barclays expects to pay between £5 million and £7.5 million. This amount is aimed at addressing the “inconvenience or distress” experienced by customers during the outages, particularly earlier this year.

### What Happened with Barclays’ IT System?

The problems began at the end of January and lasted several days, coinciding with important financial events like paydays for many customers and the deadline for self-assessment tax returns. Barclays reported that performance issues with their mainframe computer, which is crucial for handling large amounts of data for big organizations, caused the disruptions. As a result, about 56% of online payments made by customers failed during this period.

To resolve these issues, Barclays is currently undergoing extensive testing on a software fix provided by their mainframe supplier. These outages have raised concerns about the reliability of banking technology, with projections indicating that Barclays could owe up to £12.5 million when factoring in all outages that occurred from January 2023 to February 2025.

### High Costs of Banking Disruptions

If Barclays follows through on its compensation plans, it would mark one of the highest compensation payments made by a bank in recent years. For context, the Bank of Ireland has only paid out £350,000 in compensation for their service disruptions.

Many customers won’t have to apply for refunds themselves; some will automatically receive their compensation, while others may need to provide additional information to facilitate their payments.

### Uncertainties Surrounding Affected Customers

Despite their commitment to compensate, Barclays has not disclosed how many customers were impacted by the disruptions. They are currently working to identify all those who faced inconvenience. An unfortunate side effect of these outages is an expected increase in fraudulent activities. Barclays has indicated that they have already encountered cases where individuals have tried to exploit the situation for personal gain, and they expect more reports of fraud in the coming weeks.

The Treasury Committee, which is overseeing this matter, is also looking into IT issues across all banks that prevent or limit customer access to their accounts.

### Banking Sector Outages Are Not Isolated Incidents

A recent inquiry by the Treasury Committee found that the nine biggest banks and building societies together experienced a staggering total of 803 hours of unplanned service disruptions over the last two years. This figure translates to approximately 33 days of service being down, spread over 158 individual IT failures.

Among the banks examined, NatWest reported the longest recurring outages, with 194 hours of downtime. HSBC was not far behind, with recorded disruptions totaling 176 hours.

### Reasons Behind Frequent IT Failures

In their responses to the Treasury Committee, banks cited several common reasons for these IT failures. Among the major culprits were issues from third-party suppliers, disruptions due to changes in systems, and internal software glitches. This situation raises questions about the robustness of technology that underpins essential banking services.

It’s important to note that the data collected by the committee did not take into account the latest round of online banking failures that occurred just before the inquiry. These recent issues affected numerous customers during payday, adding to the strain on Barclays and others in the banking sector.

### Customer Impacts and Concerns

Customers experiencing outages, particularly during critical financial times like paydays, naturally feel anxious and frustrated. The lack of access to funds, especially when trying to meet urgent obligations, can lead to significant distress. Automated refunds and proactive communications from banks can ease some of this discomfort; however, the trust in these institutions often hinges on their ability to deliver reliable services consistently.

Banks are now under increasing scrutiny to fix their technology and improve service reliability. The recent IT problems at Barclays and other banks have highlighted the need for greater transparency and accountability in the financial system.

In summary, Barclays and the entire banking sector are facing mounting pressures to upgrade their technology and address ongoing issues that disrupt service. As more customers engage in online banking, the expectation remains clear: reliable and accessible banking services are of the utmost importance in maintaining customer trust and satisfaction.