What is Financial Disclosure and why is it Important?

What is financial disclosure?

Financial disclosure is the process of exchanging financial information with another person and is the foundation of financial proceedings during separation and divorce. Each party discloses to the other information regarding all of their finances by way of the court approved format named Form E.

What does Form E cover?

Form E is a comprehensive overview which covers:

1. Your current income and sources of income and any changes to your expected income;
2. Your assets, including property, bank accounts, stocks and shares, ISA’s, property such as cars, jewellery or art and pensions;
3. All liabilities, including credit or store cards, overdrafts or loans; and
4. Evidence of all of the above.

It is important to ensure that all of your assets are including on your Form E, no matter how small, to ensure that any settlement that is reached is fair and also that it meets the needs of all parties and children. Further, if you do fail to disclose an asset, this could place you at risk of having the agreement set aside on the basis of fairness, or because full disclosure has not taken place.

Once completed, financial disclosure and Form E should be mutually exchanged and will either be completed in line with a court deadline or a mutually agreed upon time. Following exchange of disclosure, parties can then progress to negotiate or agree a settlement.

Why is financial disclosure important?

Some people may be wary of providing such information, but financial disclosure is an integral and important part of coming to an agreement with a former partner or spouse. Your solicitor will be unable to advise on the fairness of a settlement; assist in negotiating a settlement, or provide advice on whether or not a proposed settlement would be approved by the court without seeing what is in the ‘matrimonial pot’.

Financial disclosure covers the assets and liabilities in your name, but it also covers assets held in trust or those owned with other people, including inherited property, as well as your plans for the future, your budgets and any upcoming changes to your financial status.

When do I need to provide financial disclosure?

It is important to provide financial disclosure as early as possible and is normally exchanged as the first step in trying to negotiate an out of court settlement. Once court proceedings have been issued a direction will be made for financial disclosure to be exchanged on a formal basis. Once your solicitor is aware of all of the assets, you can start to review this together and formulate an offer to settle matters or progress to the next stage of court proceedings.

There is a duty to provide full and frank disclosure, which remains an on going obligation throughout the matter. This means that you have a duty to keep the other party updated of any changes to your financial circumstances, such as a new job/pay increase/bonuses received or conversely additional debt or borrowing/reduction in income or benefits/or a redundancy for example.

Can I refuse to provide this?

If you refuse to provide full and frank disclosure, it can be very difficult to have any meaningful negotiations or discussions regarding settling matters, which can create delay to reaching a settlement and escalate costs.

Further, if one party refuses to co-operate with a voluntary process and provide disclosure, this may leave the other with very little option to progress, other than to issue court proceedings against them.

If proceedings have already been issued and the court has requested financial disclosure take place and one party still continues to refuse, the court can draw adverse inference from this, costs orders can be made against the party refusing to co-operate and if they continue to refuse, they can be held in contempt of court, which can be punished by a large fine and/or a prison sentence.

If you would like advice on financial disclosure or any other element of financial proceedings, would like to discuss this with a member of our family law team, please give us a call us on 01608 656590.