The Civil Liability Bill sets out an effective new framework for
how, when and by whom the discount rate will be calculated. The
changes improve transparency and accountability in the process,
which should lead to a more stable and fairer method for setting
the rate in the future.
A real-world approach, based on how claimants actually invest
their damages is central to the draft legislation. This is critical
to establishing a fairer and more robust framework for setting the
rate, in order to ensure the 100% compensation principle is
properly adhered to.
The previous framework led to a wholly theoretical rate that
failed to reflect the investment practices of claimants and led to
chronic over-compensation. Indeed, the UK is currently an
international outlier; at minus 0.75% our discount rate is the
lowest, and accordingly the most costly, of the world's major
economies.
