Financial remedies on divorce

Assessing the reform options for the laws governing finances on divorce and the ending of a civil partnership

The Law Commission published a scoping report on the 18 December 2024, along with a summary of the report and a Welsh version of the summary.

The problem

Going through a divorce or ending a civil partnership is often a stressful and hugely consequential period for any couple – for both their personal and family lives, as well as their finances.

Every year, tens of thousands of couples begin proceedings for separation which result in the use of financial remedy orders – orders which determine how their finances are divided after they are no longer together. Financial remedy orders can include the sale and transfer of property, maintenance for spouses, civil partners and children, and the splitting of pensions.

However, the laws which govern the use of financial remedy orders are now several decades old, dating back to the Matrimonial Causes Act 1973, and subsequently mirrored in the Civil Partnership Act 2004.

Half a century after the passage of the 1973 Act, the Government asked the Law Commission to review whether the current law is working effectively, and delivering fair and consistent outcomes for divorcing couples.

The project

In its review, the Law Commission carried out a detailed analysis of the current laws on financial remedies, to determine whether there were problems with the current framework which required law reform, and what the options for reform might look like. We undertook comparative analysis of financial remedies law in other countries, and considered current legal and socio-economic research, in particular the work of ‘Fair Shares? Sorting out money and property on divorce’ project, funded by the Nuffield Foundation.  

As part of its analysis of existing law, the Law Commission considered whether there was potential for reform in specific areas such as:

• The discretionary powers given to judges over the division of financial assets, and any need for a clear set of principles, enshrined in law, to give more certainty to divorcing couples.
• Wider powers given for the courts to make orders for children over the age of eighteen.
• How maintenance payments for an ex-spouse or civil partner should work.
• The effect of the behaviour of separating parties when making financial remedy orders. 
• Orders relating to pensions and whether they are overlooked when dividing the divorcing parties’ assets. 
• The factors judges must consider when deciding which, if any, financial remedy orders to make. 

Terms of Reference 

Read the project’s Terms of Reference (ToR) here.

Background

In 2014, the Law Commission’s report, Matrimonial Property, Needs and Agreements, looked at marital property agreements and other specific aspects of the financial consequences of divorce and dissolution.

As part of this review, the Law Commission considered whether the issues covered in the Matrimonial Property, Needs and Agreements project required review beyond its 2014 recommendations.

Our findings 

The Law Commission’s scoping report does not make recommendations for reform of the law. That would be the task of further, substantive law reform. The report does, however, conclude that financial remedies law requires reform. It finds that the law does not, to use the words of the question set out in our Terms of Reference, “provide a cohesive framework in which parties to a divorce or dissolution can expect fair and sufficiently certain outcomes”.  

The Commission finds that the current law contained in the Matrimonial Causes Act 1973 (and mirrored in the Civil Partnership Act 2004) does not reflect the significant developments to financial remedies law arising out of judicial decisions. Combined with the wide-ranging discretion contained in the current law, this means that it is not possible for an individual going through divorce to understand, by reading the statute, how their case will be decided. The law lacks certainty and accessibility to an extent that could be argued is inconsistent with the rule of law. 

The scoping report discusses four possible models for reform of the law: 

• codifying the existing law;  

• codifying the law plus providing statutory reform on discrete issues (for example, pre-nuptial agreements);  

• introducing a set of underpinning principles and objectives to guide the court’s discretion; and 

• creating a ‘matrimonial property regime’ that will provide rules for dividing up property on divorce, with the court’s discretion strictly confined. 

These options exist on a spectrum – the first model preserves the court’s current discretion, but with greater transparency so that a revised statute would reflect what actually happens. Each model thereafter moves further along the spectrum from discretion to certainty, with the last model, a matrimonial property regime for England and Wales, offering the least discretion and the greatest certainty. 

The scoping report also considers how reform in the specific areas identified above (and others) could be approached. Such issue-specific reform could take place within any of the reform models outlined above (except for the first model which is limited to codifying, rather than changing the law).  

Next steps 

The next step is for Government to decide whether it agrees with our conclusion that the law requires reform and, if it does, what shape reform should take. If reform goes ahead, the Law Commission would be well placed to undertake a project and provide Government with recommendations, once a model for reform has been chosen.  

Under the Protocol between the Lord Chancellor (on behalf of Government) and the Law Commission of England and Wales, the responsible Minister will respond to the Scoping Report as soon as possible, and in any event with an interim response within six months of publication of the Report, and with a full response within a year. 

Contact

For general enquiries, you can contact the team at: financialremedies@lawcommission.gov.uk.

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