Court dismisses FCA appeal on ipagoo and finds no trust in e-money regulations
The Court of Appeal has handed down its judgement on the administration of ipagoo LLP, an e-money institution. The Court dismissed the FCA’s appeal on whether the UK’s Electronic Money Regulations create a statutory trust, as well as the administrators’ cross-appeal on the extent of the asset pool.
The Court found:
- The EMRs do not impose a statutory trust in relation to funds received from e-money holders.
- It is not necessary to impose a statutory trust to fulfil the requirements of the EU’s Electronic Money Directive or Payment Services Directive.
- The asset pool should include funds which have not been properly safeguarded.
The decision is a setback for the FCA which had argued that the construction of a trust in the legislation was necessary to ensure a high level of consumer protection for e-money holders. However, the Court's wide interpretation of the “asset pool” on insolvency to include funds that were not properly safeguarded leads to an outcome which is not unlike a trust. E-money holders may not hold a proprietary interest in the relevant funds but they could still benefit from rights over the firm’s assets in priority to other creditors.
