Since it became responsible for the regulation of current accounts in November 2009 it has been the FSA's policy to refund customers in situations where they have not authorised a transaction on their account unless there is clear evidence of recklessness or fraud. The caveat being that if a later investigation uncovers evidence of negligence or fraud then the money can be reclaimed from the customer.
This policy however does not seem to be implemented across the board with a caller to Radio 4's programme Money Box recounting his experience with HSBC. John Gregg had his cashline card stolen from him while printing a mini statement from a cash point. The thieves 'shoulder surfed' him to see his pin and then stole his card as it was being ejected from the machine. The thieves then withdrew £1,000 from a neighbouring ATM. When Mr Gregg reported the crime to HSBC they refused to issue a refund with the explanation that he had not covered up his pin sufficiently. HSCB subsequently apologised and refunded the £1000 along with £100 as compensation for the inconvenience caused.
The director of the FSA who is responsible for the regulation of this particular area has asked the banks to provide him with comprehensive information on the number of refunds which are being processed straight away in order for him to analyse what further action needs to be taken.