Barclays set to pay out millions in customer compensation after IT outage

British bank Barclays has revealed it could pay out between £5 million and £7.5 million in customer compensation following a significant tech outage earlier this year.

Barclays recently experienced a significant IT incident on 31 January

In a letter to the UK Treasury Committee on 26 February, Barclays UK CEO Vim Maru says that from 31 January to 2 February 2025, an “IT incident” occurred due to a “software problem in a critical module of our UK Mainframe operating system”.

This resulted in “5% of customer attempts to log into the mobile app and online banking” failing, while “those that successfully logged in, 17% attempted to submit a payment of which 56% of them failed”, Maru adds.

The bank’s UK mainframe powers key functions such as debit cards, deposits, and overdrafts, while also providing support for the company’s Private Bank and Wealth Management (PBWM) and International and UK Corporate Bank divisions.

With more than 13 million “digitally active” UK customers, Barclays acknowledges that “through no fault of their own, some of our customers and clients may have suffered loss or distress and inconvenience”, states Maru, adding that the bank is continuing to “work through the impact to ensure no customer or client will be out of pocket as a result of the incident”.

Maru also disclosed that the bank has already compensated “less than £5 million” for “loss and inconvenience” caused by additional technical failures over the last two years.

Maru’s letter was one of nine submitted to the Treasury Committee from leading UK banks and building societies. The Committee says its data reveals that these institutions combined have “accumulated at least 803 hours, the equivalent of more than 33 days, of unplanned tech and systems outages” across the last two years, with “at least” 158 breakdowns reported.

The Treasury Committee adds: “The data referenced above does not include the most recent outages affecting Barclays customers between 31 January – 2 February and various banks on 28 February, disruption which left many people distressed on payday and prompting concerns from MPs. The Committee will be requesting further information from those organisations involved in those instances.”

Common causes of these tech outages include “problems with third-party suppliers, disruption caused by a change in systems, and internal software malfunctions”, the Committee says.

Dame Meg Hillier MP, chair of the Treasury Select Committee, comments: “The fact there has been enough outages to fill a whole month within the last two years shows customers’ frustrations are completely valid.

“The reality is that this data shows even the most successful banks and building societies hit technical glitches. What’s critical is they react swiftly and ensure customers are kept informed throughout.”