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The government has announced that it is appoint three experts to consider the levels of compensation – more specifically the discount rate – victims of the most serious injuries should receive.
Though presented by the Lord Chancellor as a necessary exercise to ensure ‘we get this right’, the move is but a further delay to rectifying a historic wrong.
The discount rate, currently set at 2.5%, is applied to the compensation a claimant is awarded. This is based on the assumption that the successful claimant will achieve a return by investing the compensation – hence the need to award them a slightly smaller sum.
Although insurers and, it seems, the Lord Chancellor claim that the rate should be even higher than it is currently, the truth is that the current rate and the way it is determined means people with life-altering and serious injuries remain undercompensated.
The current rate is not tied to interest rates, and it remains to be amended if and when the Lord Chancellor wishes.
The Association of Personal Injury Lawyers (APIL) succeeded in lobbying then Justice Secretary Ken Clarke to agree to a review of the rate in 2010 by threatening a judicial review, but four years have now passed with no concrete measures in sight.
When the government seeks to reduce access to justice or cut compensation, it acts quickly, often ignoring lengthy consultations. This was the case, for example, with the Criminal Justice and Courts Act, the Enterprise and Regulatory Reform Act and even the LASPO provisions on referral fees and reductions on fixed fees.
But when it’s a case of improving the rights of injured people, the Lord Chancellor, together with the rest of the government, appears to be opting for a policy of dragging his feet.
For many years now, injury victims have been unduly penalised by a discount rate much higher than that of average interest rates being applied to compensation agreements.
It’s time for the government to take action to rectify this wrong and ensure that victims get the compensation they deserve.
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