Barclays is to pay millions in compensation for recent IT outages which prevented customers from banking.

The lender said it expects to pay between £5m and £7.5m in compensation to customers for “inconvenience or distress” caused by a payday outage last month, the influential Treasury Committee of MPs said.

The glitch began at the end of January and lasted several days.

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This was caused by “severe degradation” in the performance of their mainframe computer, a large computer used by big organisations for bulk data processing.

This caused 56% of online payments to fail.

Up to £12.5m, however, could be paid when all outages over the last two years are factored in, the committee said.

It would be by far the biggest amount of compensation paid by a firm in the last two years. Irish bank Bank of Ireland would be the second having issued £350,000 in compensation.

The committee is investigating IT problems at all banks that prevent or limit customer access.

Why does this keep happening?

As part of their inquiries, banks said common reasons for IT failures included problems with third-party suppliers, disruption caused by systems changes and internal software malfunctions.

The responses were received before last Friday’s online banking failures which caused difficulties for millions on payday but the committee said it would request data on the latest disruption.

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