Santander's IT Nightmare: Outage Leaves Customers Without Funds—Can You Claim Compensation?

Santander has resolved its latest outage, which left many customers unable to access their accounts, make payments, or transfer funds. The bank apologised for the inconvenience and assured customers they would not be left out of pocket if financially impacted. However, this incident is part of a much broader trend of IT failures affecting major UK banks.

According to data published by the Treasury Committee, nine of the country's largest banks and building societies have collectively suffered 158 IT failures since January 2023, resulting in over 33 days of service disruptions.

Why Are These Outages Happening?

The Treasury Committee's findings indicate that IT failures at UK banks, including Barclays, HSBC, and NatWest, have led to prolonged downtime, disrupting customers' ability to manage their finances effectively. In total, these disruptions have amounted to 803 hours of banking outages, with Barclays experiencing a severe system failure where more than half of all online payment attempts failed.

Experts point to several reasons behind these banking failures, including issues with third-party service providers, software glitches during updates, internal system malfunctions, and an increase in cyber threats targeting financial institutions. Chris Skinner, a leading financial technology expert, has highlighted that banks are grappling with a complex mix of outdated and modern systems, which require constant maintenance. He noted that IT failures often occur on Fridays and near paydays, coinciding with planned software updates, but also warned that cybercriminal activity may be a contributing factor.

Can Santander Customers Claim Compensation?

Compensation for banking disruptions is not automatic and depends on individual cases. The Financial Conduct Authority (FCA) does not mandate automatic refunds but expects banks to handle compensation claims fairly. Customers may be entitled to compensation if they can prove financial losses, including:

• Late fees caused by missed payments.
• Overdraft charges incurred due to inaccessible funds.
• Any direct financial damage resulting from the outage.

To claim compensation, customers should keep records of failed transactions, including bank statements and receipts, before contacting Santander to lodge a formal complaint. If Santander does not provide a satisfactory response, the complaint can be escalated to the Financial Ombudsman Service, which can intervene if the bank fails to resolve the dispute within 15 days.

How Customers Reacted to the Santander Outage

Many Santander customers took to social media to vent their frustrations over failed payments, missing wages, and unresponsive customer support. One customer posted on X (formerly Twitter), stating: 'I can't get home because of this. No access to my funds, and this is the second time it's happened.' Another wrote: 'Santander, please fix your mobile banking. I'm at a pub and can't even transfer money.'

On Downdetector, over 600 complaints were logged within hours, with 52% of reports involving failed instant payments and 26% related to card transaction failures.

A Growing Crisis: Banking IT Failures Across the UK

The timing of Santander's outage aligns with recent findings from the Treasury Committee, which uncovered persistent IT failures across UK banks. The report revealed that:

• Barclays suffered 33 outages totalling 93 hours, leading to £12.5 million in compensation.
• NatWest recorded 13 incidents resulting in 194 hours of downtime, with £348,000 in payouts.
• HSBC experienced 32 failures, causing 176 hours of disruptions and paying out £232,697 in compensation.

Santander itself has experienced multiple service failures in recent years. In November 2022, more than 2,275 customers were locked out of their accounts due to an online banking issue, while in February 2024, over 400 users faced problems with Santander's Faster Payments service, preventing them from transferring money. Despite repeated outages, Santander has paid out only £17,000 in compensation so far. This figure could rise significantly if affected customers pursue claims following the latest disruption.

What's Next for UK Banks?

As digital banking continues to expand, frequent service failures raise concerns about the reliability of the UK's financial infrastructure. Customers and regulators are demanding stronger safeguards to prevent future disruptions, and the Treasury Committee's report has urged immediate improvements in banking IT systems.

With rising frustration among customers and increasing scrutiny from financial regulators, UK banks must prioritise IT resilience to maintain trust in digital banking services. Whether Santander and other major banks can address these systemic issues remains to be seen.