22 January 2018Print This Post

Defendants “dragging their heels” in hope of discount rate change

Ward: Accommodation claims complication

Defendants are dragging their heels in anticipation of the discount rate increasing, a medical negligence specialist has complained.

Trevor Ward, a senior solicitor at specialist Southport firm Fletchers, also warned fellow claimant lawyers that it would be “extremely dangerous” for them to settle at any rate other than the current -0.75%.

Last September, the Ministry of Justice announced that it was to change the basis on which the discount rate was calculated, with the rate set by reference to ‘low risk’ rather than ‘very low risk’ investments as now.

This would likely mean adjusting the current rate of -0.75% to somewhere between 0% and 1%, it estimated.

Mr Ward said there was “a huge level of uncertainty” around when the new rate would be introduced and what it would be.

“The assumption of a 1% rate is just that – an assumption. It shouldn’t be impeding settlements or delaying negotiations from going ahead, even if case trials are set to take place in 2019 or later,” he said.

“The rate is still -0.75% until stated otherwise. Yet, we’ve been working on cases that are due to settle within the next year or two, and we’ve seen defendants dragging their heels in order to delay negotiations in case the rate changes before the case goes to trial.

“It’s extremely dangerous in my view for claimant advisors to settle at any rate other than -0.75% – this could be negligent practice and could compromise the 100% compensation principle, which the government has so far indictated an intention to retain.”

Mr Ward added that accommodation claims formed an intrinsic part of the equation and had to be factored in to how the new rate was determined.

“The current -0.75% would actually lower the amount that claimants receive to cover their housing costs – compensation is usually determined based on capital use over their lifetime, so they could actually end up owing money in theory.

“In these cases, the 1% rate may actually work better than -0.75%, which makes it even more difficult to decide on one rate that can be applied fairly to all accident claims on the current law.

“The government needs to give serious consideration as to how these claims are dealt with in order to come up with a rate that will ensure all claimants receive a fair settlement that meets their individual life-long requirements one way or another.”

By Neil Rose


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