The formal and final part of the discount rate review in England & Wales started today, 19 March 2019, and must end by 5 August. The high likelihood is that this review, the first under the Civil Liability Act 2018, will deliver a rate different from and higher than the current minus 0.75% rate (which was set in accordance with the Damages Act 1996).
Today is 90 days after 29 December 2018, the date on which the 2018 Act received Royal Assent, and the Act allows no more than 90 days after Royal Assent for the review to start. If the review itself were also to take up all of its allotted time under the Act – 140 days – then it would conclude no later than 5 August 2019 with a new rate being set and applying to any claim resolved on or after that date. Today is also the date scheduled for the final (stage 3) last parliamentary debate on Scottish legislation to set a discount rate on a quite legal different basis, as Rachel Rough noted in this post last week.
The beginning of the discount rate review was signalled by London Stock Exchange RNS 2151T posted at 07:00 this morning. The RNS route is entirely appropriate given that the discount rate has an impact on listed insurers in particular and it was the means by which the 2017 changes to the discount rate were signalled by the-then Lord Chancellor.
Given the sensitivities, we do not expect to see further public relevant announcements from the government until the end of the rate-setting window. There will be no further consultation: the 90 day period after Royal Assent has already seen a call for evidence about investment of damages and a request for views on the Government Actuary’s technical memorandum that set out the basis on which GAD proposes to conduct analysis to inform the rate-setting decision of the Lord Chancellor.
The process of setting a discount rate is not, in our view, susceptible to Brexit-related delay. If that is correct, then there will be a new rate in force in England & Wales in less than five months. During this period it is very likely indeed that parties will be particularly careful about the basis on which they seek to resolve claims.
Alistair Kinley, director of policy and government affairs