Third of PI victims 'get no investment advice'

The Law Commission has warned that personal injury victims who win compensation claims often lose out because of poor investment decisions over compensation funds.

Accident victims are generally pleased at the time of settlement when faced with large sums of money. But this satisfaction fades "when the reality of long-term ill effects and reduced capacity for work bite" says a commission report.

But the report also says there is a significant amount of discontent among victims on how they are advised to invest or spend compensation funds.

The Law Commission says: "Most victims are keen to preserve the value of their damages for the future. But on the whole they do not appear to be in the best position to yield the maximum returns from the damages."

It adds: "The availability of independent financial advice is patchy. Accident victims are not profligate, but they may regret the choices they make."

The survey says over two-thirds of PI victims who win settlements of between u5,000 and u20,000 received no advice.

Of those winning compensation above u20,000, only 14 per cent obtain investment advice from lawyers. One third claimed they had received no independent advice at all.

John Young, Law Society vice-president and partner at Cameron Markby Hewitt, says all lawyers have a duty to ensure good investment advice is available to clients who win compensation.

"There are perhaps only 900 firms which are involved in the area of providing financial advice," he says.

"But if a firm has won damages or compensation for someone, then part of the service they offer should be for them to give advice if competent, or help their clients to get that advice from a qualified source," says Young.

"A normal question should be 'Do you need advice?'. And then you should say, if you can't do it, you should put them in touch with other people."