Resolving finances on separation and the increased use of private FDRs

There has been a significant increase in separating parties paying for private Financial Dispute Resolution (pFDR) hearings to resolve the financial aspects of their relationship breakdown.

What is an FDR?

Although couples are encouraged to settle their finances out of court, there are occasions when an application to court is necessary. In the standard court process, there are typically three hearings: a financial dispute appointment, a FDR, and a final hearing. 

An FDR involves the parties spending the day at court negotiating a settlement through their legal representatives, with the aim of avoiding a final hearing. All discussions at the FDR are on a ‘without prejudice’ basis, which means that any offers or discussions cannot be disclosed in future hearings. The parties attend a hearing where the judge will review any agreement reached, or they can provide an indication as to the type of order they would make if the matter proceeded to a final hearing. The judge therefore does not provide a final decision at the FDR but provides a steer for the parties as to what they would deem a fair and reasonable settlement.

Why are separating parties opting for private FDRs?

Many parties are now opting for private FDRs to resolve the financial aspects of their separation as they are quicker than going through the regular court system. 

With a private FDR, parties can choose and agree on the retired judge or barrister that they would like to instruct to act as a ‘judge’ for the ‘hearing’, and they can also schedule when the session should take place, and at a time that is convenient for them. This allows the parties to remain in control of the process. The regular court process is not as flexible, as parties are not able to choose the judge who hears their matter, and they are at the hands of the court regarding the timetabling of the hearing. 

Although private FDRs are expensive (costing in the region of around £10,000 plus VAT, not including the costs of legal representation), the process is much quicker than the regular FDR process, as the parties are not subject to the backlogs in the court listing.   

The reality of private FDRs

In essence, a ‘two-tier’ system is emerging; those who can afford to opt for a private FDR with a quicker outcome, and those who cannot afford the costs of a private FDR and have to resort to the regular court process. Some argue that this may impact access to justice for those who cannot afford the associated fees of a private FDR.

Although a private FDR can be an effective way for wealthier parties to settle their finances, the indication provided in a private FDR, as in the regular court process, is not a final decision. It is ultimately a question for the parties as to whether they are willing to follow the views of the person conducting the private FDR. There is no guarantee that the parties will reach an agreement, and in such circumstances, an application to the court for a final hearing may be required.

If you would like any advice on any of the issues raised in this article, please get in touch via our contact page or contact Ella Stewart directly here.