Do UK e-money and payment services firms hold safeguarded funds on trust? (August 2021)
Client Briefings
Introduction
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The High Court has recently held (in Re ipagoo) that the customer funds of an insolvent UK authorised electronic money firm are not held on trust for customers. This conflicts with an earlier High Court decision (in Re Supercapital) which held that customer funds of an insolvent UK authorised payment services firm were held on trust and FCA guidance stating that both e-money and payment services firms hold their customer funds on trust.
The recent court decision gave a broad application to the statutory priority claims of customers in the insolvency of the e-money firm. However, the difference of view on the characterisation of customers' rights creates uncertainties for e-money and payment services firms.
