Safeguarding under the Payment Services Regulations

This case concerned an application by a members’ voluntary liquidation liquidator of an electronic money institution for directions in relation to certain residual money held by the company that had not been claimed by clients.

The company was authorised under the Electronic Money Regulations (EMRs) rather than the Payment Services Regulations (PSRs) but never issued e-money.

The court held as follows:

  • To hold that the company was regulated under a scheme that it had not been authorised by, and in circumstances where the company never made an application for authorisation, would be perverse. Accordingly, the company was regulated under the EMRs.
  • Notwithstanding authorisation and regulation under the EMRs, the PSR safeguarding provisions applied as a result of regulation 20(6) of the EMRs, which was to the effect that the PSR safeguarding provisions applied in relation to funds received by electronic money institutions that were not e-money.
  • Following the decision in In re Allied Wallet, the similarities between the safeguarding regulations in the EMRs and PSRs meant that, applying the decision in In re Ipagoo, the safeguarding provisions in the PSRs did not impose a statutory trust.
  • The court then laid down a timetable for the clients to claim the moneys, failing which, the residual sums could be paid into the Insolvency Services Account.

In regards to Rowe v Redbones [2024] EWHC 369 (Ch).

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