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Family Justice Council to publish guidelines clarifying 'financial needs'

Date:17 APR 2014
Journals Manager + Online Editor
Separating couples will be given clear new guidelines setting out what they should expect when property and income is distributed by the courts, Simon Hughes has announced.    

In March 2014 the Law Commission ‘Matrimonial Property, Needs and Agreements' report found there was confusion about how one person should be required to meet the other's financial needs after their relationship has ended. When separating couples go through the courts, the court has a wide discretion to decide how their property and income should be distributed. One of the main factors considered is the ‘needs' of each party. However, under the current law the exact meaning of needs is unclear and there is confusion about the extent to which one spouse should be required to meet the other's needs and for how long.

The Law Commission recommended that the Family Justice Council produce authoritative guidance on financial needs. The guidance would explain the outcome a judge would aim for in determining a settlement, including achieving eventual financial independence. This would enable couples to reach an agreement that recognises their financial responsibilities to each other. The guidance would also help to bring more consistency to how the law is applied in the courts.  

The Ministry of Justice has therefore asked the Family Justice Council to take forward the Law Commission's recommendation to clarify the law of 'financial needs' on divorce or dissolution of a civil partnership.  

Justice Minister Simon Hughes said:

'We want separating couples to have the best information available to help when they approach the difficult and emotional separation process. This new guidance will lead to a better understanding and more realistic expectations of what they will expect to receive as financial settlements and enable swifter and better resolution of disputes.
We are committed to making sure that when couples do make the decision to separate they make use of mediation rather than go through the confrontational and stressful experience of going to court. This new guidance will help mediators give advice to separating couples so that they can settle disputes out of court. In those cases that do go to court it will also help the judiciary and prevent regional variations in the interpretation of "financial needs".'
The new guidance will be published later in the year and will help:
  • Divorcing couples - by dispelling myths about need and help couples to approach the separation process with realistic expectations.
  • The Judiciary - by removing the regional variations in the interpretation of ‘financial needs' as identified by the Law Commission.
  • Mediators - so they will be able to give financial advice to help separating couples settle disputes out of court.
The Law Commission's report put forward three main recommendations:

(1) written guidance to define and explain financial need;
(2) an assessment of the feasibility of producing numerical guidance to calculate the likely financial outcome of divorce or dissolution; and
(3) making qualifying nuptial agreements statutorily binding through amendments to the Matrimonial Causes Act 1975.
The Ministry of Justice is taking forward the first of these recommendations and is currently considering the law Commission's report more fully, including considering the next steps on pre-nuptial agreements and the feasibility of producing numerical guidance. An interim response to the report will be published in August 2014.

Speaking of the guidance, Alison Hawes, Partner and family law expert at Irwin Mitchell, said:

'It is very welcome to see the Government investing both time and money into providing clarity around this hugely important issue, which will not only even out regional variations in how cases are dealt with, but also provide practical guidance to couples about the law so they can better plan for the future.

Such guidance will also be welcome by the family law community, as it will allow specialist lawyers to provide an even greater level of support to their clients.
However, there is a certain level of caution which needs to be considered from the outset. For example, it is a concern to see the Government suggest mediators will be tasked with giving both legal and financial advice.

A mediator's role is to assist people to reach an agreement, with such work being coordinated alongside separate legal and financial advice. Mediators certainly give valuable information, but advice could be regarded as something that would damage their neutrality and - potentially - their overall value to the couple they are working with.

It is also difficult to escape the conclusion that the Government's focus is on saving money, fundamentally by cutting the number of people approaching lawyers or the courts. Care must be taken to ensure such steps are not at the expense of fairness and justice, where, for example, one person may be in a more vulnerable economic position and needs the protection of the law.

While it is an extremely useful tool to help couples reach agreement upon separation, medication is not an answer for everybody and this should be recognised.'
Alison Hawes added:

'A disappointment is that this announcement does not address the Law Commission's proposals for the introduction of qualifying nuptial agreements.

This concept received a very positive response from the legal sector and could be vital in preventing many people from facing the cost and stress of going through the courts. We hope the Government is able to announce some plans on this, as well as a timetable for reform - and not repeat the lack of action they took regarding proposed reforms of laws related to unmarried couples.'