On 1 June 2020, the Ministry of Justice published the following statement: -
“Due to the impact of Covid-19, the Bank of England reduced the base rate to 0.1% on 19 March 2020 as an emergency measure and made a decision on 7 May 2020 to maintain that rate until further notice. In response to this, the Lord Chancellor has reviewed the Court Funds Office (CFO) rates of interest payable to clients and has directed that from Monday 1 June 2020 these will change to the following:
- Special Account – Reduces from 0.5% to 0.1%
- Basic Account – Reduces from 0.1% to 0.05%”
This also means that the interest payable on special damages in personal injury and clinical negligence claims (such as past loss of earnings) has been reduced. This is because this reflects the rate payable on the CFO special account.
Interest payable on special damages is calculated at half the special account rate which is therefore now 0.05%. This is a significant reduction from what was already an incredibly low figure. Prior to this change, a Claimant recovering £50,000 for past losses would have recovered £125 for a year’s interest on that sum. Now, they will only recover £25.
At Bell Lax, our specialist personal injury and clinical negligence lawyers recognise that the rules relating to interest mean that Claimants are very poorly compensated for having to wait long periods of time to receive their compensation.
Low interest rates discourage Defendants from dealing with cases promptly and making early admissions of liability.
Our expert lawyers therefore, do all that we can to progress our clients’ claims as quickly as possible, including issuing proceedings at Court without delay, if there is no sign of the Defendant providing a positive response and seeking to settle the claim.
We are also looking into how the changes may affect our advice for Claimants under the age of 18. Settlements in such claims require Court approval and the usual Order is for the child’s compensation to be paid into the CFO. It may now be possible to persuade the Court to allow the money to be invested externally (assuming that such investment carries limited risk).
If you or someone you care about has sustained injury as a result of an accident or clinical negligence, please feel free to contact one of our specialist lawyers for a free no obligation discussion on 0121 355 0011.