Response to the Third Personal Injury Discount Rate Consultation

‘This further response deals with the issues and questions raised within the 6th December 2018: ‘Setting the Personal Injury Discount Rate – A Call for Evidence’.  As part of this response we have invited assistance from a number of the investment management providers managing Nestor’s clients’ money’

Nestor’s Credentials

Nestor is a Director-led Independent Financial Advice firm, specialising in personal injury and clinical negligence work. This takes the form of expert witness work in relation to periodical payments, advising on and managing post-settlement investment strategies for claimants and establishing Personal Injury Trusts in order that claimants can maintain entitlement to state benefits where appropriate.

Expert witness instructions are mostly from claimant solicitors, with about 10% being defendant instructions. We receive in total around 150 expert witness instructions each year from legal practices throughout the country.

We advise on the establishment and monitoring of investment strategies for many of the UK’s well-respected Professional Deputies/Trustees, as well as acting directly for lay clients and/or their Deputies/Trustees. Nestor is based in the North-West of England and has clients across the whole of the UK. We have funds under management totalling approximately £570 million, plus cash accounts totalling over £100 million. Our average sized investment portfolio is around £700,000. Nestor helped to establish over 250 personal injury trusts last year. Nestor understands the intricacies of Local Authority Provision, State Benefits and the interaction with personal injury damages.

In the field of personal injury IFAs, Nestor is a leading specialist in advising on catastrophic injury cases. Our expertise led us towards innovation and specialist product manufacture for the personal injury market. Nestor’s core investment proposition is built around a cautious investment approach, and we commission detailed third-party analysis focussed on performance and the reduction of volatility within investment portfolios. Nestor, as an IFA practice, works with a number of select Investment Management firms, each of which has undergone a thorough process of due diligence. Perhaps the best known of these is Seven Investment Management (7IM), whom Nestor assisted to create the UK’s first bespoke investment fund aimed at personal injury claimants – ‘The 7IM Personal Injury Fund’.

The 7IM Personal Injury Fund was launched back in October 2009 as being a low-risk investment product, suitable for personal injury claimants who have recovered personal injury damages awards. As at 31st December 2018 the fund size was £228m, of which £125m is attributable to Nestor’s clients. The fund, an Open-Ended Investment Company (OEIC) is run and managed by 7IM.
As IFAs, the directors at Nestor build long-term professional relationships with our claimant clients post-settlement, and we see evidence of the impact that sustaining serious injury has on their quality of life and that of family and friends. In most cases, they are unable to work. Also, their family members are often unable to work, having spent time to care for their loved one, with many years out of the workplace. Our clients’ complex needs impact on every area of their lives. There is not one client that would not give the money back if they could have their health and mobility returned.

The purpose of the compensation is to put the claimant back into the position they would have been but for the accident or negligence. The damages are calculated to pay for past, immediate, and specific future needs. For those that have been unable to receive (or where defendants have been unwilling to pay) appropriately indexed periodical payments for future losses, the lump sum calculation undercompensated personal injury survivors for most of the period between 2001 to 2017. The calculation of the lump sum based on a discount rate of 2.5% disadvantaged claimants during that period. In our experience, claimants simply want a fair and reasonable sum of money with which to meet their reasonable and predicted expenditure.
Nestor has provided responses to both the March 2017 personal injury discount rate consultation and the November 2017 Civil Justice Committee Hearing. Copies of these responses are attached.
This further response deals with the issues and questions raised within the 6th December 2018: ‘Setting the Personal Injury Discount Rate – A Call for Evidence. As part of this response we have invited assistance from a number of the investment management providers managing Nestor’s clients’ money.

We have also considered the Government Actuary’s Department ‘Setting the Personal Injury Discount Rate’ Technical Memorandum dated 22nd January 2019 when preparing this response.

PIDR 3rd DR Consultation Response Final