The importance of a thorough financial investigation during divorce

Full and frank disclosure requires both parties to provide a complete picture of their respective financial positions, including all assets, income, liabilities, and confirmation of any material changes throughout the proceedings. This obligation applies whether the issue of finances is resolved through negotiation, mediation, or court proceedings. Failure to comply can lead to severe consequences, such as cost orders, setting aside of financial orders, or even criminal proceedings.

Form E (financial statement) remains the primary tool for facilitating disclosure. It is an approved  court document, used within and outside formal proceedings.  It requires each party to detail their financial circumstances, supported by evidence such as bank statements, payslips, and property valuations. Once completed, Form E is exchanged, allowing solicitors to scrutinise the information and raise questions to clarify discrepancies or request additional documents. Even in non-court settings, completing a Form E is highly recommended, as it provides a structured framework for transparency, helping both parties understand the true value of marital assets, income and needs.

Why a Thorough Financial Investigation Matters

A comprehensive financial investigation serves a number of purposes:

1. Informed Decision-Making: Understanding the full extent of your and your spouse’s financial position allows you to make informed decisions about your future. Without this, you risk agreeing to a settlement that does not meet your needs or reflect a fair division of assets.
2. Fair Outcomes: Solicitors rely on accurate financial information to provide tailored advice and negotiate settlements that align with the principles of fairness outlined in the Matrimonial Causes Act 1973, particularly Section 25, which lists factors the court considers, such as financial needs, income, and standard of living.
3. Transparency: Full disclosure ensures that no assets are hidden, giving you peace of mind that the settlement is based on a complete picture. Transparency is vital for moving forward without lingering doubts.
4. Court Requirements: In court proceedings, completing Form E is mandatory.  Failure to provide accurate disclosure can lead to penalties, including cost orders.   Form E includes a Statement of Truth, which, if signed dishonestly, may result in the order being set aside or criminal charges for fraud.

Failure to provide full disclosure can delay proceedings and lead to significant legal repercussions. A notable case illustrating this is W v S (Committal) [2015] EWFC B130, where a party’s refusal to complete a fully compliant Form E, coupled with a dismissive note claiming their disclosure was “more than adequate,” led to a committal application. The court imposed a suspended 14 day prison sentence, giving the party a final opportunity to comply by a set deadline.

More recently, case law has highlighted the courts’ robust approach to non-disclosure. In Goddard-Watts v Goddard-Watts [2023] EWCA Civ 811, the Court of Appeal set aside a financial order due to the husband’s deliberate concealment of assets. The court reiterated that non-disclosure undermines the fairness of proceedings and justified reopening the case to ensure a just outcome. Similarly, Moher v Moher [2019] EWCA Civ 1482 clarified that courts may draw adverse inferences when a party fails to provide full disclosure, potentially leading to a settlement skewed in favour of the compliant party.

The courts have continued to emphasise efficiency and transparency. The Financial Remedies Court (FRC), established to streamline financial proceedings, has reinforced the importance of early and complete disclosure to reduce delays and costs. The FRC’s Good Practice Protocol (updated in 2024) encourages parties to use Form E voluntarily in non-court settings, such as mediation or arbitration, to promote consistency and fairness.

Additionally, the rise of alternative dispute resolution (ADR) methods, such as private financial dispute resolution (FDR) hearings, has placed greater emphasis on pre-hearing disclosure. Courts and mediators now expect parties to exchange Form E well in advance to facilitate productive negotiations.

Addressing Hidden Assets

A thorough financial investigation is crucial to uncover hidden or misrepresented assets. If concerns arise about non-disclosure, solicitors can request additional documents, such as tax returns or business accounts, or engage forensic accountants to trace assets. The courts have extensive powers to address non-disclosure, including:

• Freezing Orders: To prevent assets from being dissipated.
• Search and Seizure Orders: In extreme cases, courts may authorise searches to recover hidden documents or assets.
• Adverse Inferences: Courts may assume the non-disclosing party has greater wealth, adjusting the settlement accordingly.

To ensure a smooth financial investigation:

• Be Proactive: Provide all requested documents promptly, including bank statements, pension valuations, and property deeds.
• Be Honest: Disclose all assets and income, even if you believe they are insignificant. The Statement of Truth on Form E carries legal weight.
• Seek Expert Advice: Engage with your solicitor to review your spouse’s disclosure and raise questions about inconsistencies.
• Consider Mediation: Voluntarily completing Form E in mediation can streamline negotiations and reduce costs.
• Stay Updated: Inform your solicitor of any material changes in your financial circumstances during the process.

In conclusion, a thorough financial investigation by way of full and frank disclosure, is essential for achieving a fair and sustainable financial agreement. By completing Form E you ensure transparency, and informed decision-making. The courts’ robust approach to non-disclosure, as seen in cases like Goddard-Watts and W v S, serves as a reminder of the serious consequences of failing to comply.

Article dated: 25/08/2025

Gemma Lee Associate Family Law Solicitor

Gemma Lee is an accomplished Associate Family Law Solicitor dedicated to helping families navigate through difficult legal situations with compassion and expertise. With years of experience in Family Law, Gemma is well-equipped to handle a variety of cases, including Post-nuptial Agreements, Separation, Divorce, Finances and private Children Matters.