Truss unveils immediate review of the discount rate method

Justice secretary Liz Truss today started a root-and-branch review of the controversial method for calculating deductions from personal injury settlements.

The Ministry of Justice published a consultation asking how to set the discount rate in future and whether the current methodology is still fit for purpose.

Truss adjusted the rate from 2.5% to -0.75% last month, insisting it was the ‘only legally acceptable’ level she could set.

That decision was accompanied by a pledge to review the method before Easter, and the six-week consultation marks the start of that process.

Measures under consideration include whether:

• the current methodology to calculate whether the rate is appropriate
• the discount rate should be set by an independent body
• more frequent reviews of the rate are needed
• periodical, rather than lump sum payments, might be a better way to compensate victims.

Truss stressed this is not a review of the rate set in February, but rather a look again at the process which preceded it.

‘This consultation will consider whether the current framework is fair to both claimants and defendants,’ she said.

The MoJ says the law is clear that claimants must be treated as risk-averse investors, reflecting they are financial dependent on this lump sum for long periods.

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Truss unveils immediate review of the discount rate method