The Law Society has responded to the new discount rate policy, announced by the Ministry of Justice on 7 September.
The MoJ claims the reforms will make sure personal injury victims get the right compensation and could also see significant savings for the NHS – as well as for motorists through lower car insurance premiums.
Changes mean the rate would be set by reference to ‘low risk’ rather than ‘very low risk’ investments as at present, better reflecting evidence of the actual investment habits of claimants, the MoJ says.
The rate will also be reviewed at least every three years – and the expertise available to the Lord Chancellor in carrying out the reviews will be extended by the creation of a role for an independent expert panel in the process.
Lord Chancellor and Justice Secretary David Lidington said: “We want to introduce a new framework based on how claimants actually invest, as well as making sure the rate is reviewed fairly and regularly.
“In developing our proposals, we have listened carefully to the views of others, and we will continue to engage as we move forward.”
Responding, Law Society president Joe Egan said: “For people catastrophically injured through someone else’s negligence this technical process is a very important part of our justice system.
“A regular review of the discount rate every three years clearly makes sense and will be of benefit to both claimants and defendants. We welcome the inclusion of an independent panel of experts assisting the Lord Chancellor.”
However, Mr Egan warned against allowing the reforms to undermine the principal of 100% compensation.
He said: “Those who have suffered lifelong injury need to have reassurance that the sum the wrongdoer is ordered to pay will genuinely be sufficient to meet their needs for the whole of their lives and will not run out, leaving them unable to afford necessary treatment and support. The needs of people seriously injured through another’s negligence should be considered to at least the same extent as the interests of defendants and the public purse.”
He also championed claimants’ right to choose on how they receive compensation, saying: “Claimants who are successful should be given the right to choose how they manage their compensation. In some cases lump sum payments are more appropriate and in others periodical payment orders are more suitable. Either way, claimants should always have a choice between a lump sum and a periodical payment order.”