Jason Daniel Baker & Anor. v The Financial Conduct Authroity

Jason Daniel Baker & Anor. v The Financial Conduct Authroity

The Court held that neither the Electronic Money Regulations 2011 nor the underlying EU Directives require or impose a statutory trust over funds received by an EMI from electronic money holders. The safeguarding regime provides for insulation of such funds against claims of other creditors in insolvency, not a proprietary interest or trust. The asset pool for distribution on insolvency must include a sum equal to all relevant funds that ought to have been safeguarded, not just those actually safeguarded, and this priority can operate without express amendment to the Insolvency Act 1986.

Parties
Applicants/respondents: Jason Daniel Baker and Geoffrey Paul Rowley; Intervener/appellant: The Financial Conduct Authority
Jurisdiction
England and Wales
Judgment Date
09 March 2022
Procedural Posture
Civil Appeal / Court of Appeal Judgment
Outcome
Appeal and cross-appeal dismissed
Legal Topics
Electronic Money Regulations, Statutory Trusts, Insolvency Priorities, Consumer Protection, Interpretation of EU Directives
Insolvency Law Financial Regulation EU Law Electronic Money Regulations Statutory Trusts Insolvency Priorities Consumer Protection Interpretation of EU Directives

Case Brief

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Parties

Jason Daniel Baker and Geoffrey Paul Rowley

Applicants/respondents

The Financial Conduct Authority

Intervener/appellant

Procedural Posture

Civil Appeal / Court of Appeal Judgment

Legal Issues

  1. 1 Whether funds received by an electronic money institution (EMI) from electronic money holders are subject to a statutory trust under the Electronic Money Regulations 2011 (EMRs)
  2. 2 Whether the safeguarding requirements of the EMRs and the underlying EU Directives require the imposition of a statutory trust
  3. 3 Whether the asset pool for distribution on insolvency should include funds that ought to have been but were not safeguarded

Ratio Decidendi

The Court held that neither the Electronic Money Regulations 2011 nor the underlying EU Directives require or impose a statutory trust over funds received by an EMI from electronic money holders. The safeguarding regime provides for insulation of such funds against claims of other creditors in insolvency, not a proprietary interest or trust. The asset pool for distribution on insolvency must include a sum equal to all relevant funds that ought to have been safeguarded, not just those actually safeguarded, and this priority can operate without express amendment to the Insolvency Act 1986.

Court Disposition

Appeal and cross-appeal dismissed

Orders

  • No statutory trust arises over relevant funds under the EMRs
  • Asset pool for insolvency distribution includes all relevant funds that ought to have been safeguarded, not just those actually safeguarded