The Lord Chancellor announced on the 19th March 2019, that he is commencing his review of the Personal Injury discount rate under the Civil Liabilities Act 2018. This means that he has 140-days to conclude his review, and announce the new discount rate at the latest 5th August 2019. As part of his review, he must consult with both the Government Actuary and HM Treasury.
At the centre of deliberation, will be the need, as best he can, to uphold the 100% damages principle for personal injury claimants. The principle has always been central to the calculation of personal injury damages, although for too long the discount rate issue was ignored. When the rate dramatically reduced to -0.75% in 2017, it was long overdue, but was still greeted by a storm of protest from the defendant lobby. Now, two years later, it is hoped that the Lord Chancellor will ensure fair compensation to personal injury claimants.
The recent Call for Evidence which concluded in January, and the Government Actuary’s Technical Memorandum made for some interesting reading. Nestor responded to the MOJ and our contribution was focussed on ensuring that personal injury claimants are adequately compensated, and that claimants ought not be forced to take high levels of investment risk, in order to achieve the 100% principle. In any event, claimants, will be forced to take some investment risk to achieve fair compensation, and therefore will need proper advice in accordance with the new law, and the cost of this, must be paid for by the defendant.
Similar personal injury damages legislation has recently passed through the Scottish Parliament. Of note is a late amendment to increase the standard adjustment for investment advice and taxation from 0.5% to 0.75%, which will likely result in the discount rate in Scotland being reduced further. We hope that in England & Wales, the Lord Chancellor pays due regard to the actual cost of advice and the effect of taxation when determining the rate.
As you would expect, the Directors at Nestor are fully conversant with the current situation, and are busy offering expert advice to claimants and their legal advisers on this issue, in addition to advice on Periodical Payments, Investing Damages, Personal Injury Trusts and Accommodation Funding Reports. Please contact us for more information.