More delays to decision on compensation deduction rates

Nearly two years after concluding an in-depth consultation regarding the controversial 2.5% deduction rate on compensation payouts, the UK government have again delayed making a decision on the issue.

The Lord Chancellor and Justice Secretary Chris Grayling has deferred making a decision and has appointed an independent panel of three investment experts to provide advice regarding the deduction rate.

Currently, a discount of 2.5% is applied to all large compensation payouts - usually those that involve medical negligence - on the assumption that the recipient will invest their settlement and receive a comparable return on their investment.

The deduction rate has become a contentious and controversial issue in recent times, with insurers and defendant lawyers lobbying for an increase while claimants, claim companies and related consumer groups requesting a decrease in the rate - arguing that the current rate leaves those with serious and life-changing injuries undercompensated.

John Spencer, the President of APIL (Association of Personal Injury Lawyers) said of the new delay:

“People with life-changing injuries continue to miss out on the right level of compensation to cover their needs while the Government drags its heels on rectifying the problem. Rather than just review the rate as promised, and as he should, the Lord Chancellor has now decided to delay the process further by recruiting a panel of experts to help him.”

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