As IT failures cripple major UK banks, millions of customers have been left unable to access their money at critical moments, forcing institutions like Barclays to pay out millions in compensation.
The UK’s largest banks have collectively endured over a month’s worth of IT outages in the past two years, leaving millions of customers locked out of their accounts and facing financial uncertainty. A report from the Treasury Committee has shed light on the scale of these disruptions, with banks now being forced to pay out millions in compensation.
Nine major UK banks—including Barclays, HSBC, Lloyds, Nationwide, Santander, NatWest, Danske Bank, Bank of Ireland, and Allied Irish Bank—have accumulated 803 hours of outages between January 2023 and February 2025, spanning at least 158 separate incidents. The disruptions have ranged from failed online transactions to complete system crashes on critical dates, such as payday and tax deadlines.
The recent January and February 2025 outages at Barclays were particularly severe, with 56% of online payments failing over a three-day period. This left customers unable to access funds at crucial times, triggering widespread frustration and financial hardship. The Treasury Committee’s investigation found that Barclays alone expects to pay between £5 million and £7.5 million in compensation for these incidents, bringing its total potential payout for IT failures over two years to £12.5 million.
While Barclays is set to pay the highest compensation sum, other banks have also been forced to reimburse affected customers:
These figures highlight a stark disparity in how different banks handle compensation, raising questions about the consistency and fairness of reimbursement policies across the industry.
For individuals living paycheck to paycheck, sudden banking outages can be catastrophic. Missed bill payments and unexpected financial shortfalls can cause significant distress. Treasury Committee Chair Dame Meg Hillier emphasized the gravity of the situation, stating, “For families and individuals, losing access to banking services on payday can be a terrifying experience.”
The timing of many recent outages has exacerbated their impact. The January 2025 Barclays failure, for example, coincided with payday and with the self-assessment tax return deadline, amplifying the financial chaos for thousands of account holders.
While cybersecurity concerns are often the first assumption, banks have largely attributed these IT failures to internal software issues rather than external cyberattacks. Barclays CEO Vim Maru clarified that the recent outages stemmed from a “severe degradation” of the bank’s mainframe processing system rather than malicious activity.
Common causes cited across the sector include:
The Treasury Committee’s findings have intensified scrutiny on how banks maintain their IT infrastructure and handle crisis response. Regulators are now considering stricter oversight, including the potential for increased fines or mandatory compensation structures to ensure customers are adequately protected from financial harm.
Dame Meg Hillier has urged banks to take accountability, stating, “The fact that outages have accumulated to over a month’s worth of failures in just two years is unacceptable. Banks must prioritize resilience and transparency to maintain consumer trust.”
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