At the Government’s request, the Justice Committee has agreed to undertake a pre-legislative scrutiny inquiry into the draft clause Assumed rate of return on investment of damages (PDF 719 KB) published on 7 September in Annex A to Command Paper 9500.
Call for written submissions
The Committee would be grateful for submissions addressing any or all of the following questions concerning the draft legislation:
Objective of legislation
- The Government's stated objective is to "reflect actual claimant investment behaviour and ensure claimants are compensated in full neither more or less". Does the text of the draft legislation achieve this objective, and could it be better achieved by other legislative or non-legislative means?
Fairness of legislation
- Will the proposed legislation result in a fairer framework for (a) claimants, especially those for whom any risk would be ill-advised (b) defendants and (c) wider society? Is the move from "very low risk" to "low risk" appropriate, and are these terms clear enough?
- Should the way personal injury claimants generally choose to invest lump sum damages influence how damages are calculated for all such claimants?
Impact of legislation
- How robust is the Government’s analysis of the proposal and of its impact on (i) claimants (ii) insurance companies and (iii) the NHS? (Impact assessment). Who will be the main losers from the proposal and how much will they lose by?
- How likely is it that changing the methodology for calculating the discount rate will result in a reduction of insurance premiums? Is the Government right to assume that insurance companies will pass on savings?
Process proposed by legislation
- Who should be on the expert panel, and who should make the final decision? Are there any circumstances where the Lord Chancellor should not follow the advice of the independent expert panel?
- Would it be better to review the rate more, or less, frequently than proposed (every three years)?
- Does the proposal allow different discount rates to be set for different types of loss? What would be the advantages and disadvantages of this approach?
The Committee would be grateful for submissions made by Friday 13 October.