The High Court, in its recent judgment Regarding ipagoo LLP (in administration) [2021] EWHC 2163 (Ch) (Ipagoo), determined that there is no legal confidence in the protected funds held under the Electronic Money Regulations 2011 (EMR). This can be contrasted with the decision In Re Supercapitale [2020] EWHC 1685 (Ch) (Supercapital) who found that the Payment Services Regulation 2017 (PSP) creates a legal trust on the protected funds.

The Supercapital judgment was at the center of our article Unfinished Business? The rules for the protection of payment services after Supercapital in the December 2020 edition of the Butterworths Journal of International Banking and Financial Law ((2020) 11 JIBFL 734).

The two decisions are difficult to reconcile: where the Supercapital decision concluded that a trust existed, Ipagoo the court came to the opposite conclusion on almost identical legislative provisions. At the same time, where the Supercapital decision left a number of questions unresolved, including as to which assets were part of the ownership of the ‘trust’, the Ipagoo The ruling provides clear guidance to insolvency administrators as to which funds should be treated as part of the “asset pool” of customer funds to be distributed.

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