The Law Commission’s reform of the laws governing financial arrangements on divorce and the ending of civil partnerships set out in new report have been broadly welcomed by family lawyers, but warn any overhaul must not be at the expense of flexibility.
The report proposes four potential models for reform, ranging from codifying current case law to introducing a default regime with clear rules for dividing assets. These recommendations aim to address widespread criticisms of the current system, including its unpredictability, inefficiency, and lack of clarity.
The Matrimonial Causes Act 1973, the cornerstone of these laws, has long been criticised for being outdated and disconnected from modern societal norms. But some family lawyers argue that while aspects of the law are outdated there are more urgent reforms needed, particularly concerning unmarried couples who live together.
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Key challenges with existing laws
The current framework allows judges broad discretion in financial remedy cases. While this flexibility has some advantages, it often leads to inconsistent outcomes and encourages litigation. Katherine Marshall, a family partner at Shakespeare Martineau, said it was ‘unacceptable,’ divorcing couples were relying on laws ‘originally written in 1973”’and interpreted through evolving case law.
‘Although changes certainly need to be made, this doesn’t mean that a complete overhaul is needed,’ Marshall said. ‘The current system gives judges discretion when deciding how finances and assets are divided, unlike regimes in some other countries where the rules are far more rigid.’
Marshall also highlighted the need for greater public understanding of the divorce process, particularly regarding financial claims and the treatment of valuable assets like pensions.
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‘Generally, there needs to be a much better understanding about how finances are treated in divorce,’ she said. ‘Many are still unaware that simply getting a divorce does not close off the financial claims a couple can make against each other. The majority of couples divorcing ignore pensions; often a very valuable asset. More education on the process is needed, and hopefully the publicity surrounding this report will shine a light on the issue.’
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Proposed models for reform
The Law Commission outlined four models for reform, each balancing the need for clarity with the benefits of judicial discretion:
- Codification: This approach would consolidate established case law into statutory form, maintaining judicial discretion while simplifying the framework.
- Codification-Plus: Building on codification, this model would introduce reforms to address unsettled legal areas, such as nuptial agreements and spousal maintenance.
- Guided Discretion: Clear statutory principles would guide judicial decisions, offering predictability while preserving flexibility.
- Default Regime: A radical departure from the current system, this model would establish predetermined rules for asset division, reducing discretion significantly.
Announcing the report, commissioner for property, family and Trusts, Professor Nick Hopkins said: ‘The end of a marriage or civil partnership is a stressful time for couples. It is important that when this happens, people should be able to understand what the law says about how their finances will be divided.
‘Our report concludes that the current legislation, which has not been updated for 50 years, does not provide couples with a cohesive framework for a fair or sufficiently certain outcome. We offer several models for reform for government to consider and are well placed to provide final recommendations for reform once Government has decided which of these models to adopt.’
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Mixed reactions from experts
The recommendations have elicited varied responses from legal experts and stakeholders. Chris Lloyd-Smith, family law partner at Anthony Collins, said that while it was ‘perhaps time to review the legislation and the case law that has built up subsequently’ there were other areas that needed more urgent attention, particularly with regards to unmarried cohabiting couples.
‘Most divorces in the UK are settled out of court,’ Lloyd-Smith explained. ‘The role of the judiciary is to try to ensure that the needs of the parties and their children are met. Needs cases would not be made any easier by the reform of financial remedies law.’
Jo Edwards, chair of Resolution‘s Family Law Reform Group, acknowledged the merit of the report but warned against moving towards an overly rigid system: ‘Whilst it is true that legislation in this area is over 50 years old, how it is implemented in practice has moved forward significantly,’ Edwards said. ‘Our concern is that any moves to too rigid a system could act as a straitjacket, placing restrictions on judges and leading to less fairness for many.’
Marshall also warned against ‘putting strict parameters around fluid situations’.
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‘No two cases are ever the same, and our current legislation allows judges to factor a number of variables into decisions and take into account nuance, anomalies and outliers,’ she said.
Both Lloyd-Smith and Edwards called for more urgent reforms, including legal protections for cohabiting couples, an issue not addressed in the current report, and one that Resolution has been calling for this change for years.
Next steps
The report asks the government to determine whether reform is necessary and, if so, to select a preferred model. While the proposals mark an important step toward modernizing divorce finance laws, stakeholders remain divided on the best path forward.
Marshall concluded: ‘More education on the process is needed, and hopefully the publicity surrounding this report will shine a light on the issue.’
