Can you claim compensation from your bank over IT outages?

Yahoo

06-03-2025

Days of technology outages have blighted some of Britain's biggest banks over the last two years, a government report has found.
New data published by the Treasury Committee found that there has been more than 33 days' worth of unplanned tech and system outages in the last two years for nine of the UK's biggest banks and building societies.
The cross-party committee published its findings after it asked the lenders' UK chief executives to reveal the scale of recent IT failures and estimates for how much customers might be paid in compensation.
Across the nine banks and building societies, there have been at least 158 IT failure incidents between January 2023 and February 2025, according to estimates they provided.
Common reasons given for the incidents include problems with third-party suppliers, disruption caused when systems were changed, and internal software malfunctions.
However, the figure does not include a recent outage at Barclays, or disruption to other banks' online services in more recent weeks.
The Treasury Committee's report documented 158 IT failures across nine of the UK's largest banks and building societies, including Barclays, HSBC, and NatWest, amounting to over 803 hours – or 33 days – of downtime.
For Barclays alone, the report highlighted a significant incident where more than half of online payment attempts failed due to 'severe degradation' of its systems.
The data suggests these outages are not just occasional blips but part of a broader pattern, with the committee highlighting enough incidents to 'fill a whole month' in two years.
The committee blames several factors for why these outages are happening. Among those are issues with third-party suppliers, system glitches during upgrades, and internal software failures.
Financial technology expert Chris Skinner said the vast array of technology systems needed to operate in the modern banking world meant banks have 'such a smorgasbord of things they have to work with' that the 'competence of keeping up with these changes is really challenging every bank'.
He said that clusters of incidents were also more likely because of the shared financial IT infrastructure and close links between institutions.
Skinner said it meant that situations similar to the CrowdStrike outage in 2024 – where an issue within one infrastructure firm caused a global IT outage – were now more likely in the banking sector.
Skinner added that the recent flurry of outages, a number of which have occurred on Fridays and close to paydays, was likely because firms plan software updates for the weekends as it tends to be quieter, but said cybercriminal activity could also be playing a role.
He said: 'I think there's an issue here with reliability, service and resilience, and that's the accountability of the people who are organising the structures, both from within the business, and those who look over the business in terms of the regulators.
'At the moment, I think both are probably finding it too hard to keep up.'
The rules around compensation for banking disruptions are shaped by a mix of regulatory frameworks and individual bank policies, but the process isn't always automatic or straightforward.
Banks are not obligated to provide compensation and it typically hinges on whether you've suffered a direct financial loss or significant inconvenience due to the outage. The Financial Conduct Authority (FCA), which oversees UK financial firms, doesn't force automatic compensation for every glitch.
Instead, banks are expected to assess claims case-by-case under the FCA's principle of treating customers fairly.
You would need to demonstrate how the disruption impacted you – such as being charged for missing a bill and charged or an inability to access funds when they were needed.
If you have been impacted you can lodge a formal complaint by contacting your bank and providing detailed recorded of any additional costs as a result of an outage – such as bank statements, receipts or invoices.
If you are unhappy with the compensation offered you have the option to escalate your complaint via the Financial Ombudsman Service, who will typically get involved 15 days after you first complained to your bank.
Barclays suffered several days of disruption to it banking services at the end of January following an IT glitch, with customers still experiencing issues with payments, outdated balances, and payments made or received not showing.
The outage occurred because of a software problem in a part of its UK mainframe operating system and was not the result of a cyber attack. Barclays confirmed that, during that incident, more than half of attempts to make an online payment failed.
The outage began on a Friday – the same day as January payday for many British workers and the deadline for self-assessment tax returns.
Thousands of customers experienced issues with mobile banking, online banking and paying bills but ATMs were unaffected.
Following the outage, Barclays could now pay out up to £12.5 million in compensation to affected customers.
The bank estimated that it expects to pay out between £5 million and £7.5 million in compensation for the specific outage, adding to an estimated £5 million for other incidents between January 2023 and January 2025.