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3.04.24

The Law Commission proposes changes to financial remedies available to separating spouses

In an article we published in April 2023 we discussed the points of law that required reform in relation to the way financial orders are considered and granted when a marriage or civil partnership irretrievably breaks down.  We considered the Law Commission’s report of 2014, Matrimonial Property, Needs and Agreements. The Commissions’ latest review, Financial Remedies on Divorce, considers what further action needs to be taken around the legislation governing financial remedies.  This was long overdue, as the Matrimonial Causes Act 1973 and the mirroring Civil Partnership Act 2004 are now several decades old.

Professor Nicholas Hopkins, law commissioner for property, family and trust law, said: “Fifty years since the current law was put in place, it’s essential that we look at whether it is working effectively for all parties. This is a hugely important area, affecting separating couples and their children at an incredibly stressful time of their lives. It is essential that any reform in this area is very carefully considered”.

The options for reform will be raised further to research being carried out on financial orders made in England and Wales and financial remedies law in other countries. The project is set to conclude with a scoping paper to be available in November 2024 as part of the pre-consultation phase.

What may change?

The main areas which will be considered for reform are:

  1. The discretionary powers exercised by judges over the division of financial assets.  There are currently no set rules as to what a Judge will order and on what basis. The proposal is to introduce some clear principles, enshrined in law, to ensure that parties have more certainty about what to expect as a likely outcome.
  2. The powers of the court to make orders in relation to children over the age 18.  In many cases, especially when children embark on apprenticeships or continue their education until tertiary education, they may still rely on their parents financially. The new proposals would ensure that this is taken into consideration.
  3. A system to regulate maintenance payments between spouses.
  4. Consideration that the courts will need to give to the behaviour of separating couples when making financial orders.
  5. Pension sharing orders.  These are often overlooked and, in order to resolve this, more directions need to be given as to how to obtain such orders, where needed.
  6. Any other factors that the judges must consider when making any financial remedy order.

How will this affect those going through a divorce or dissolution?

The hope is that a clear set of new rules and guidance will help people going through a divorce or dissolution by:

  1. Offering clear and concise guidance and rules readily available from the very outset, in order to allow them to have a good understanding of the system and make informed decisions.
  2. Reducing the timeframe required to conduct and conclude negotiations, limiting the scope for unreasonable settlement offers.
  3. Reducing legal costs by encouraging early settlement.
  4. Making certain financial remedies more accessible in the circumstances.
  5. Ensuring all relevant factors are considered by the court when it reaches a decision.

This will undoubtedly be helpful for family lawyers too. If the rules are clearer, judges will have less discretionary powers, which will make it easier for professionals to provide more certainty about the likely outcome to their clients. This, together with the ongoing Family Court Reporting Pilot (which we talk about here), should make the whole process increasingly transparent and straightforward.

What’s next?

Researchers and entities such as Resolution have been for some time encouraging change.  Alarmingly recent research funded by the Nuffield Foundation and carried out by Emma Hitchings (University of Bristol) in partnership with Caroline Bryson and Dr Susan Purdon (Bryson Purdon Social Research) and Professor Gillian Douglas, Professor Emerita at King’s College London, revealed that only around a third of separating couples actually obtain an order regulating finances following divorce and dissolution. The Fair Shares Report is available here and sets out the pressing need for reform.

Although a consultation on proposed reforms is unlikely to appear until 2025 at least, the prospects are positive. Referring to recent reforms to divorce law, Justice Minster Lord Bellamy said “this important step builds on our landmark no-fault divorce reforms which ended the blame game, helping protect families and children from the stress of separation”.

 

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Legal Disclaimer

Articles are intended as an introduction to the topic and do not constitute legal advice.