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Published: 11th April 2025
For couples going through divorce or dissolution, achieving a fair financial settlement can be one of the most challenging and uncertain aspects of the process. There is currently no fixed framework for dividing assets and divorce cases that end up in court rely on the judge’s discretion, which can lead to unpredictability and a variety of outcomes.
As family law solicitors, we see first-hand the difficulties this creates, as we strive to provide clarity, support, and reassurance to help our clients work through their financial negotiations with confidence.
In this article, we examine the issues with our current legal framework and discuss the possible direction of future reforms proposed by the Law Commission.
The legal framework governing financial settlements following divorce or dissolution has remained largely unchanged for more than 50 years. At its core is the Matrimonial Causes Act 1973 (MCA 1973), which forms the basis for financial remedy law in England and Wales.
This same framework was later extended to civil partnerships through the Civil Partnership Act 2004, which mirrors the financial remedy provisions of the MCA 1973.
Under both frameworks, there is no fixed formula for calculating financial settlements. Each case is assessed on its individual merits, guided by factors such as the needs, contributions and resources of the parties involved.
While flexibility allows for fairness in complex situations, the absence of clear statutory principles or objectives has led to growing concerns over inconsistency, unpredictability and difficulty in advising clients with confidence – causing great uncertainty.
These concerns prompted a review by the Law Commission, an independent body responsible for reviewing and recommending reforms to the law in England and Wales to ensure it is fair, modern, and accessible.
In April 2024, the Commission published a Scoping Report exploring the current state of financial remedy law for divorce and dissolution, outlining potential models for reform aimed at making the system clearer and consistent.
Under Section 25 of the MCA 1973, courts are given broad discretion to decide what constitutes a fair financial settlement, taking into account a wide range of factors. These may include:
While these factors offer a framework, the statute does not provide an express objective or guiding principle, such as prioritising equality, needs or compensation. This allows judges to determine fairness on a case-by-case basis, making decisions that reflect the individual circumstances of each case.
So, what are the implications of a discretionary system, both for divorcing couples and the legal professionals advising them?
The discretionary nature of decisions means there’s no set formula for dividing assets. While this allows courts to tailor settlements to individual circumstances, it makes it difficult for solicitors to offer clear, outcome-based advice.
Each judge can weigh Section 25 factors differently, which means predictions are often speculative, especially in complex or “borderline” cases.
In practice, cases with similar facts can lead to markedly different outcomes, depending on which judge hears the case and how they interpret fairness.
This undermines confidence in the system and can sometimes fuel disputes, as some people may feel incentivised to “test the waters” rather than settle early.
As family lawyers, we’re required to keep pace with a rapidly developing body of case law, often interpreting nuanced or evolving principles.
The absence of statutory objectives or formulas, as seen in other jurisdictions, increases reliance on precedent, which can shift depending on emerging judgments.
Over time, case law has significantly shaped how Section 25 of the MCA is interpreted :
This makes it hard for family law practitioners to offer definitive advice. Additionally, there’s ongoing discussion about what financial remedies should aim to achieve.
Should they prioritise long-term fairness, potentially including ongoing spousal support, or should they encourage financial independence and a clean break?
White v White established equality as a guiding concept and subsequent cases like Waggott v Waggott reignited discussion around the extent to which former spouses should continue to share in future earnings.
In addition to statute and case law, both the court and family law practitioners must stay abreast of an ongoing flow of studies, reports and recommendations from key organisations, such as Resolution and CAFCASS.
They must also take account of the financial remedies procedure outlined in the Family Procedure Rules, along with various judicial announcements and guidance notes.
To help address these issues, the Law Commission sets out four potential models for reforming the financial remedies framework in England and Wales.
This would provide more clarity on specific issues without overhauling the entire system but retains broad discretion, while offering more detailed statutory guidance.
3. The Guided Discretion Model would introduce overarching statutory principles to shape how judges apply the law such as:
This model would still allow flexibility, but within a clearer framework of objectives.
Each model brings potential benefits for couples and for practitioners, but there are also some trade-offs.
The Codification and Codification-Plus models preserve the flexibility that many of us value, but may still rely heavily on case law, so they will not eradicate uncertainty.
Guided Discretion may strike a middle ground, offering consistency while allowing the court to adapt to individual circumstances. As for the Default Regime, its highly predictable structure may feel too rigid for some, and it could potentially disadvantage individuals who find themselves in more complex or unusual situations.
If you’d like to know more about the proposed models, you can read the Law Commission’s Full Scoping Report or a Report Summary.
If you are embarking on a divorce now, reading through the report – or this blog – will not explain how a court will apply the factors set out in Section 25 of the MCA (1973) to your case. As with many legislative processes, meaningful reform could take several years to come to fruition.
The current process does mean it’s challenging to predict an outcome, and some people may find it difficult to understand how or why certain decisions are taken. Uncertainty can exacerbate stress during an already difficult time, and this could lead to prolonged disputes or unrealistic expectations about what a fair settlement looks like.
At K J Smith, we are particularly mindful of this and we aim to provide reassurance, support and much-needed clarity wherever possible. Our approach is centred on achieving long-term, sustainable financial remedies on separation that work for each client’s unique circumstances.
We provide information to enable clients to feel informed, such as details about the important financial considerations you should know when getting divorced. We also prioritise, wherever possible, conciliatory methods such as Mediation and Collaborative Law in order to reach agreements that are not only fair, but which minimise emotional and financial strain.
We believe our approach helps our clients focus on their futures, rather than becoming caught up in protracted disputes, while also aiming for solutions that ensure both parties can move forward with a sense of stability.
The Law Commission’s 2024 Scoping Report has sparked a welcome and much-anticipated conversation about reform.
The challenges within the current financial remedy system are clear. We have an outdated statutory framework, with a very wide scope of judicial discretion that can lead to inconsistent outcomes. This creates difficulties for those of us advising clients and for individuals embarking upon divorce.
At K J Smith Solicitors, we are cautiously optimistic about reform that retains some flexibility while introducing clearer parameters, particularly given that most settlements occur out of court. Learning from systems in countries like Scotland and Canada – where guiding frameworks already help reduce disputes and promote early resolution – may offer valuable lessons for us as the path ahead is mapped out.
It's now up to the UK Government to determine the direction and shape of any future changes. Striking the right balance between certainty and fairness will be a delicate task. In the meantime, our team of family law specialists remain fully engaged in this ongoing legal discussion.
We will continue to monitor developments in case law and policy to ensure we provide our clients with up-to-date, strategic advice that gives confidence through even the most complex financial matters.
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