You have to be hard headed about this. The problem is at your buyer's end.
It's in your interest to ask them to open a case under eBay's money back guarantee, through the resolution centre. This is the correct way to resolve all disputed delivery issues on eBay.
EBay will check the tracking number that you uploaded when you posted the item. (You did upload it, didn't you? If not, do it NOW!)
If the tracking record confrms that the item was delivered (including collected) they will find in your favour and you won't have to refund the buyer. Most importantly, the buyer will be unable to leave you negative feedback, or any already left can be removed.
This doesn't mean that you can't help the buyer in claiming from Royal Mail. If the buyer still has the card to collect it, and the PO gave it to someone else, this is clearly the PO's responsibility. If the buyer can't produce the card, they're unlikely to be able to claim any compensation if someone else got hold of it and claimed the parcel.
