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When Verity Hitchings had her wallet stolen, she did what she was supposed to do and alerted her bank, Lloyds TSB. In the meantime, alas, the thief had removed £990 from her account. Lloyds insisted that Hitchings must have acted without reasonable care to have enabled the thief to have made the transactions and it therefore refused to refund any of the stolen money.
Now the Banking Code is very clear that fraud victims are liable only for the first £50 of their losses, unless they can be shown to have acted without reasonable care. So, if you note your pin number on a Post-it note and stick it to your purse, you are officially a victim of your own folly and must pay the price. Crucially, however, the bank must provide evidence to show that you have been negligent.
In Hitchings's case, Lloyds seems to have reversed this duty. It tells me defensively that she has not been able to explain how the thief came by the necessary security information to withdraw the money. This is where it helps to have spent a night or two reading the Consumer Credit Act 1974. A lesser-known clause within it states that if a stolen card was used as a "credit token", the owner is liable only for the first £50. And it is deemed to have been used as a credit token if it was used to remove funds from an overdrawn account. Happily for Hitchings, her account was in the red before she lost her wallet and, even more happily, the act takes precedence over the Banking Code, according to the Financial Services Ombudsman.
Lloyds dislikes this notion and insists that the act is "open to different interpretations". However, after having digested my copy of the rules, it decides that, although they "don't apply" in Hitchings's case, it will refund her the stolen money as a goodwill gesture.
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