Judgment: High Court clarifies jurisdiction of Payment Systems Regulator

11 Oct 2023

R (NoteMachine UK Ltd) v the Payment Systems Regulator [2023] EWHC 2522 (Admin)

The High Court has today handed down its long-awaited judgment in a judicial review challenge which clarifies the law governing the jurisdiction of the Payment Systems Regulator (PSR), and specifically how it deals with complaints from participants in payment systems.

NoteMachine, an ATM operator, challenged a family of decisions taken by the PSR within its overall decision not to pursue an investigation in response to an application made by NoteMachine. NoteMachine had complained to the PSR about LINK decreasing the Interchange Rate which NoteMachine receives from cash withdrawals.

NoteMachine issued a claim with five grounds of challenge, of which four were given permission. The grounds given permission alleged that the PSR had made three narrow errors of law, and one error of fact and law. The grounds were:

  1. The PSR failed to apply s.108 of the Financial Services (Banking Reform) Act (FSBRA) correctly in concluding that it was required to deal with NoteMachine’s application under Regulation 103 of the Payment Services Regulations 2017 (PSRs 2017) instead of under s.57 FSBRA.
  2. When considering Regulation 103 PSRs 2017, the PSR failed to define and apply the concept of “discrimination” correctly as required by Regulation 103(3)(b) PSRs 2017.
  3. When deciding not to take further action in relation to the issues which the Claimant raised concerning the Competition Act 1998 (CA98), the PSR erred in its approach to s.62 FSBRA.
  4. In a letter of 12 March 2021, when deciding not to take further action in relation to the issues which the Claimant raised concerning CA98, the PSR erred in fact and in law by failing to appreciate that CA98 applies equally to Multilateral Interchange Fees which are set too low.

Sweeting J found that all four grounds failed following the substantive hearing, which took place on 16-17 March 2022. In addition, he held that s.31(2A) of the Senior Courts Act 1981 applied to preclude relief in relation to grounds 1, 4 and 5.

Michael Bowsher KC acted for NoteMachine, instructed by Hill Dickinson LLP.

Kassie Smith KC and Imogen Proud acted for the Payment Systems Regulator, instructed by Kingsley Napley.

The full judgment can be read here.