Currently the law which governs the distribution of financial resources following divorce or dissolution is made up as follows: 

1. Statute, primarily The Matrimonial Causes Act 1973 (“the MCA 1973”) – Section 25 of the MCA 1973 provides a statutory framework for courts to make decisions about how financial resources should be allocated.  This law is mirrored in the Civil Partnership Act 2004 for dissolution of civil partnerships; and 

2. Case Law – The use and interpretation of the MCA 1973 has developed through case law which sets a precedent for how the legislation may be implemented but also introduces new legal concepts which the court and practitioners may consider when determining financial remedy cases. 

The court and practitioners must also consider the Family Procedure Rules 2010, guidance from the President of the Family Division, various judicial announcements and other reports or recommendations from relevant organisations such as Resolution. 

There are, however, many drawbacks of the current legal framework. Owing to these drawbacks, the Law Commission published its Scoping Report in relation to “Financial remedies on divorce and dissolution” on 18 December 2024.  This report identifies the problems, considers whether the law needs reform and identifies some possible models on which any future reforms may be made. 

The full report can be found using the link below: 

Scoping Report in relation to "Financial remedies on divorce and dissolution" 

Below, we have summarised the potential drawbacks of the current law and set out the models which the Law Commission proposes for reform. 

What are the potential drawbacks of the current law?

The Law Commission considers the current law is both uncertain and inaccessible for the majority of divorcing couples. This makes it difficult for parties to reach a settlement, even with legal advice and this can lead to added stress and delay in engaging with the court process.  This also means that if a couple do not have any legal advice, the current law is of little guidance to them as the statute does not set out what a “fair outcome” would look like. The issues which lead to this conclusion include: 

• Uncertainty which stems from the lack of an identified objective of the law and the resulting wide discretion that is enabled through section 25 of the MCA 1973. 

• The interpretation of the statute has evolved through so-called “big money” cases which bear little resemblance to the average case.  In average cases, it is often extremely difficult to make two financial households out of one and the current law is lacking on how to approach these types of cases. 

• Parties often expend part (if not most) of the limited funds available on legal fees when arguing about how the overall pot will be split.  This is unlikely to lead to justice or fairness. This is especially relevant when emotions are high which adds further difficulties to resolving the financial remedies issues swiftly and cost effectively. 

• For some, the age of the statute alone, which has allowed the exercise of wide judicial discretion, together with significant changes to social norms over the years, is a sufficient basis to call for a reform of the law.  Others believe that the general approach under the MCA 1973 allows the court to ‘move with the times’.

• There is a lack of clear objective – the framework statute (MCA 1973) contains no express purpose or objective.  Rather, it directs Judges to consider all the circumstances of the case with reference to a non-exhaustive list of potentially relevant factors.  

• The discretionary nature of the law means there is a lack of certainty to parties involved.

• There are regional variations in the application of the law owing to the wide discretion of the court’s powers.

• As pointed about by Lord Nicholls in the case of White v White, fairness is an elusive concept and “like beauty, lies in the eye of the beholder”.  Fairness to one Judge may be entirely different to another Judge’s interpretation which further leads to the lack of certainty. 

• There are three stands of fairness articulated in Miller/McFarlane, namely “needs” “compensations” and “sharing”.  The way in which the strands relate to each other is subject to debate.  Professor Alison Diduck describes the three strands as an “inharmonious mix” which may have complicated interpretation of the law rather than clarified the search for fairness. 

The report also looks at criticisms of the current Financial Remedies Procedure and sets out concerns in respect of: 

• Costs in financial remedies proceedings – often the overall costs are disproportionate to the parties’ resources or to the issues in dispute. 

• Although there is a single, unified Family Court with a common set of rules, practitioners report that there continues to be variations in practice and procedure across different courts.  

• Issues with Litigants in Person accessing and using the Court Portal “MyHMCTS”.

The above is not an exhaustive list and the report also looks at issues regarding domestic abuse, non-court dispute resolution, the use of Form E and enforcement of financial remedy orders. 

Owing to the above, the Law Commission concludes that the current law of financial remedies requires reform. 

Proposes models on which law reform could be based

The Law Commission summarises the four models upon which the law may be reformed: 

• Codification – This would lead to minimal change to the existing law contained in section 25 of the MCA 1973.  The current law as developed through case law would be codified and the court would retain a wide discretion. 

• Codification plus – The current law would be codified.  There would be additional reform to deal with specific areas where the law is not yet settled.  The court would retain discretion but limitations on discretion may be introduced in relation to the areas of reform. 

• Guided Discretion – There would be an introduction of a set of underpinning principles and objectives which guide the exercise of the court’s discretion.  Reform would go beyond changes to existing law contained in section 25 of the MCA 1973. 

• Default Regime – Creation of a matrimonial property regime.  This would ensure couples know when marrying how property will be divided on divorce. This would result in a high level of certainty and the court would have very limited discretion.  

Now that the Scoping Report has been published, the Government will need to consider the next steps.  An interim response should be received within 6 months and a full response within 1 year. It is clear that any reform of financial remedies will be far from quick and easy.  However, it is positive that the Law Commission has recognised the need for change, which has paved the way for, in our view, a much-needed reform.