What Is a Financial Dispute Resolution Hearing? A London Family Lawyer Explains
In Brief
When a marriage breaks down, one of the most challenging aspects of separation and divorce is resolving financial arrangements and dividing assets.
For couples who cannot reach a financial settlement and who apply to the court for a financial order, a key stage in the financial proceedings is the financial dispute resolution (FDR) hearing.
At the FDR, the court assists the couple to reach an agreement on how their assets are divided. If the court is successful in helping the couple reach an agreement, it issues a final, binding court order that ends the financial remedy application.
This guide by Divorce and Family Law Solicitors in London explains what an FDR is, how it fits into the financial remedy process, what happens on the day, and how to maximise your chances of achieving a fair financial settlement at the FDR.
What is a Financial Dispute Resolution Hearing?
A financial dispute resolution hearing is normally the second court hearing after a husband, wife, or civil partner starts financial remedy court proceedings following the breakdown of their marriage or civil partnership and asks the court to resolve the dispute about how their assets should be split.
How the FDR Fits into Financial Remedy Court Proceedings
Financial remedy proceedings normally follow a set path of three court hearings:
- First directions appointment
- Financial dispute resolution hearing
- Final hearing
A couple can reach a financial agreement at any stage in the court process, and a judge can be asked to make an agreed financial consent order.
The First Directions Appointment
At the first directions appointment (FDA), the court is asked to give directions to ensure that the financial remedy application is ready for the FDR hearing.
At the FDA, the court normally makes directions about whether:
- Either spouse should answer additional financial questions contained in a questionnaire and provide additional financial disclosure to that already provided in their Form E
- Any assets should be formally valued, such as the family home, a buy-to-let property portfolio, or a family business
- Any expert reports are necessary, such as a report from a pension actuary, a report from a tax accountant on the tax implications of disposing of shares in a family business or a medical report on one spouse’s health condition and how it impacts their ability to work or on the extent of a child’s disability and how it affects the child’s needs
- Any additional persons should be involved in the court proceedings as intervenors, such as a spouse’s parents, if there is a dispute over whether monies provided by them were a gift or a loan
- If the spouses should file narrative statements of evidence. For example, if there is a dispute over whether an asset is a matrimonial or non-matrimonial asset or a dispute over whether one spouse’s health affects their earnings capacity
The questionnaire responses, statements, and reports are filed in advance of the scheduled FDR hearing so the husband and wife and their Family Law Solicitors can consider them and put forward financial settlement proposals. If the proposals are agreed, the FDR hearing may be cancelled, and the judge may be asked to make an agreed financial consent order.
The FDR hearing
At the FDR hearing, the judge reviews the paperwork, hears arguments from both sets of family lawyers, and then indicates which financial settlement outcome they believe is reasonable, to help the parties negotiate a settlement.
The judge’s indication is not binding, but it is highly influential, as it gives both the husband and the wife insight into how the court may view their financial proposals at a final hearing, without the expense or wait for a court date.
When an FDR judge offers a measured analysis of the strengths and weaknesses of both spouses' financial settlement proposals, it can help one spouse realise their settlement proposals are unrealistic, or enable the other spouse to make concessions to get a deal done.
If the couple reach an agreement at the FDR, the court will usually make a financial court order at the hearing, concluding the financial remedy proceedings.
The final hearing
A final hearing is listed if a husband and wife cannot reach a financial settlement at the FDR hearing. The final hearing is never heard by the same judge as at the FDR hearing.
At the final hearing, both spouses give evidence, and the judge decides on what a fair financial settlement and court order should be.
The Purpose of an FDR Hearing
An FDR hearing can best be described as a court-led negotiation. The judge expresses their views on the financial settlement they would make if the financial application were listed before them at a final hearing. The husband and wife are free to either disregard the judge’s indication, negotiate a revised financial settlement or accept it in full.
The purpose of the FDR is to:
- Encourage financial settlement
- Reduce legal costs and acrimony
- Avoid the need for judicial time and a final court hearing
Court Procedure and Steps Before the FDR Hearing
To maximise the prospects of a successful FDR, it is essential to follow the correct pre-FDR court procedure:
- File Form E financial disclosure
- Ask and answer financial questionnaires
- Attend the first directions appointment hearing
- Obtain any valuations or expert reports ordered at the FDA hearing
- Make open financial proposals and without prejudice proposals
- Consider the other parties' proposals and reality test them
- Review the FDR court documents prepared by your Family Law Solicitors
- Get ready to attend the FDR hearing
Form E is a lengthy court form that both a husband and wife must complete before the FDA hearing. It requires disclosure of personal and financial circumstances, including income, assets, property, savings, business assets, pensions, debts and loans, outgoings and an indication of future housing requirements and needs. The Form E should be supported by financial disclosure, such as bank statements, payslips, mortgage statements, and pension transfer values.
Each spouse can raise questions about the other’s Form E. The judge at the FDA will order which questions must be answered. The Form E also helps clarify whether either spouse will need to ask the court to order the filing of expert evidence at the FDA hearing.
Financial Proposals Before the FDR Hearing
Before the FDR, the spouses' family lawyers usually exchange:
- Without prejudice offers
- Open proposals
These proposals help both husband and wife understand what the other wants to achieve at the FDR and set out the parameters for what is up for negotiation at the hearing.
The FDR negotiations and court hearing take place ‘without prejudice.’ This means any concessions or offers made cannot be referred to at the final hearing.
At the FDR, you can be transparent about what you want because you know your bottom line won't be disclosed to the judge at the final hearing. For example, you may want to stay in the family home and ideally obtain a 50% pension-sharing order (your open proposal). However, at the FDR, you may be prepared to settle for the family home and a 25% pension sharing order (your without prejudice proposal). Settling with a reduced pension share may be cost-effective, depending on the value of the pension, as an FDR settlement means you do not have the expense and uncertainty of attending a final hearing.
The FDR Hearing
Although every FDR hearing is different, the structure of an FDR hearing is:
- Pre-hearing meeting with your lawyer or pre-hearing negotiations with your ex-spouse’s representatives
- FDR hearing – each representative outlines what the husband and wife want and why their position amounts to a fair financial settlement
- The FDR judge gives an indication, based on their reading of the specially prepared FDR documents and the representations
- Negotiation time is given to allow settlement negotiations to take place. The judge may give further indications on specific points if the husband and wife can narrow the disputed points, but need additional judicial input to avoid an impasse
- Return to the court room, and if a financial settlement has been reached, the court is asked to make a financial consent order. If no agreement has been reached, the court is asked to list the financial remedy application for a final hearing and give directions, such as orders for the filing of additional statements or expert reports
The negotiations at an FDR hearing can be very intense. That’s why it is important to prepare for the FDR hearing and to understand your bottom line so you do not end up agreeing to a settlement that you later regret.
The FDR Indication
The judge’s indication at an FDR is based on their reading of the carefully argued FDR documents, the representations made during the hearing and their experience in analysing the relevance of Section 25 Matrimonial Causes Act 1973 factors to the husband and wife's circumstances.
The Section 25 factors include:
- The assets available (matrimonial and non-matrimonial property)
- The children's needs and the child care arrangements
- The husband and wife's needs
- The length of the marriage
- The husband and wife's ages and health
- The standard of living during the marriage
- The husband and wife's contributions to the marriage – financial and as homemakers
- Housing and income needs
The judge’s indication, based on these factors, is not binding, but it normally carries weight because it:
- Reflects how a court is likely to view the competing proposals at the final hearing
- Highlights the risks of continuing the court proceedings – extra costs with no guaranteed outcome
- Emphasises the importance of pragmatism and compromise
FDR Outcomes
There are three possible FDR outcomes:
- Financial consent order made by the judge concluding the court proceedings as a full agreement was reached. The order is binding
- Heads of agreement drawn up as the husband and wife agree their financial settlement, but additional information or third party agreement is required before the court can make an agreed financial court order
- Final hearing listed as no settlement was negotiated. The final hearing is listed before a different judge
Financial Consent Orders Made at the FDR
If an agreement is reached at the FDR, the lawyers will draw up a financial consent order and go through the legal wording with you before asking the FDR judge to approve the order.
Once the FDR judge makes the order, it is legally binding, and most of the terms cannot be changed. If the court order includes a clean break, all future claims are ended.
The Benefits of Reaching a Financial Settlement at the FDR
A settlement at FDR avoids:
- The risk of a final hearing judge ordering that you get less than you were prepared to settle for at the FDR
- The requirement to give evidence and be cross-examined at a final hearing
- The delay and expense of a final hearing
The advantage of settling a financial dispute at the financial dispute resolution hearing is that you have certainty. A deal is done, and you can get on with your post-separation life even though you may have to wait for the family home to be transferred to you or sold or for a pension sharing order to be implemented by the pension administrators.
Tips for Maximising Your Chances of Success at an FDR
Here are our Divorce Solicitors' tips on maximising your chances of success at the FDR hearing:
- Prepare for the hearing – understand all relevant issues such as your housing needs and requirements, your anticipated outgoings and maximum mortgage capacity
- Reduce pressure by booking a full day off work or arranging child care cover for the day, so you are not under time pressures
- Ask questions of your solicitor if you don’t understand the legal terminology used by the FDR judge
- Be prepared to compromise, as the FDR is about negotiation
- Know your bottom line and do not feel pressurised into accepting your ex-spouse’s proposals because you do not want to go to a final hearing – neither do they
How London Family Lawyers Prepare for an FDR Hearing
As specialist Divorce Financial Settlement Solicitors in London, our team knows how important it is to prepare for an FDR. We do this by:
- Detailed analysis of financial disclosure
- Identifying and valuing all assets
- Recognising the importance and complexity of pension and business assets
- Challenging inadequate financial disclosure and asking questions about discrepancies
- Providing early, realistic legal advice on settlement options
- Helping reality test counter proposals
- Explaining litigation risk and the pros and cons of settlement at the FDR
Contact OTS Solicitors for Family Law Legal Advice and Representation at Your FDR Hearing.
Frequently Asked Questions About FDR Hearings
Is the judge’s indication at an FDR binding?
No. The indication is guidance only. However, it is usually a strong predictor of what might happen at a final hearing, so parties should carefully consider indications.
Do I have to attend the FDR?
Yes. It is important that you attend the hearing, as a significant proportion of the time spent in court involves negotiation. You will not need to negotiate directly with your ex-spouse or speak during the court hearing; your Family Law Solicitors will do that for you.
What happens if my ex refuses to negotiate at the FDR?
If your ex-spouse does not accept the FDR judge’s indication or your financial settlement proposals, they cannot be forced to settle. Instead, the judge will list the financial remedy application for a final hearing before a different judge. You can still try to reach a compromise and agree on a financial consent order by negotiation at any stage before the final hearing.
Can I bring a friend or family member to the FDR for support?
Yes. You can bring a friend or family member to court with you, but they will not be allowed into the courtroom unless the judge gives permission. If you want them to be present, they can support you during the negotiations and in any meetings with your Family Lawyers that take place outside of the courtroom.
How long does an FDR hearing last?
The hearing may be listed for an hour or less, but the negotiations and extra judge time may mean the FDR takes a half day or a full day. It is best to keep the whole day free.
Can I change my mind after the FDR?
No. If the court makes a financial court order at the FDR, you cannot change your mind and ask to renegotiate the order unless you can show that your ex-spouse failed to disclose assets or was dishonest. As a financial court order made at an FDR is binding, it is best to go to the FDR knowing what you are not prepared to concede on, so you know your bottom line.