• Financial Disclosure in Mediation and the Mediator's Role

    23.02.16

    Financial Disclosure is often a hot topic for discussion in many financial mediations whether it be due to mistrust about whether full and honest disclosure has been given, or exasperation from our more amicable clients at the need to even provide it.  Common statements in mediation sessions are:

    'We know what we’ve both got so why do we need to bother with these forms?'

    'I have provided my statements so where are yours?'

    'We are not sharing pensions so why do we have to get a CETV?'

    'My solicitor says my husband/wife hasn’t provided full disclosure and so I am going to court'

    'We don’t have anything really so cant we just not bother?'

    'Do we really have to get all of these documents?'

    'I didn’t mention that account because there is nothing in it'

    'I'm not disclosing that because it was started after we separated so is nothing to do with you'

    So how do we tackle these queries as mediators? The important thing here is ensuring that both clients and their solicitors fully understand our role in terms of financial disclosure.  Some basic principles are worthy of note along with some solutions given to clients when problems arise

    It is not the role of the mediator to complete financial disclosure forms for the clients.  The forms form the basis of that client's evidence and they must take ownership of that.  The forms we ask clients to complete are approved by the Family Mediators Association.  They follow a similar format to a Form E but are aimed at being more user friendly to the litigant in person.  Clients generally complete these themselves but can if they wish take legal advice when completing them in more complex cases.

    Sometimes clients come to mediation having already completed Form E and we are flexible in accepting copies of these forms instead rather than clients having to duplicate work already carried out.  If solicitors specifically wish for their clients to complete Form E’s rather than our Financial Disclosure forms we can explain this to the clients but they both need to be in agreement on this and may need help from their solicitors when completing the form.

    The mediator will share the financial disclosure provided by each party once both parties have provided it and within mediation sessions the parties can then raise any questions that arise.  It would not be fair to share one party's disclosure with the other in a case where that other party's disclosure has not been forthcoming unless prior consent has been obtained.  The fact that financial disclosure is copied and shared is made clear in our Agreement to Mediate which the clients sign at the start of mediation.  Sometimes only partial disclosure has been given and a mediator will take a view on whether it is at a stage where it should be shared on a case by case basis.

    In order to maintain impartiality the mediator is not able to carry out a forensic examination of the disclosure provided or cross check the accuracy of the information that the clients provide.  Queries about disclosure need to be raised by the clients in the sessions.  This enables a discussion to be had as to the options available to address that query because the mediator cannot make the decisions for the clients on this as decision making in mediation rests with the clients.  In helping the clients reach a decision the mediator is able to outline the usual obligations that the Court could impose in every case as well as the possible options that might be explored in relation to more non standard queries. 

    Taking an example in relation to pension valuations - We would explain the need in all cases for a cash equivalent transfer value to be obtained irrespective of whether pensions are large or small or pre or post separation.  We will explain that this is a basic requirement and that the Court will not approve any agreement without it.  Where one party has been advised that the transfer value is not sufficient we will explain the option of obtaining a more detailed expert report.  The client would be told that if matters were being decided by the court the request for an expert report would be put to the judge and the judge would then need to decide whether that request were reasonable given the type of pension and its value and in relation to that whether it would be relevant and proportionate to incur the cost of the report.

    What happens if someone refuses to provide disclosure?  The mediator does not have the power to force the provision of information.  The mediator needs to explain the duty of full and honest disclosure to both parties clearly and the consequences of failing to provide it.  The mediator can point out that neither party are likely to be able to take any meaningful advice from solicitors without the financial disclosure.  We also explain that if matters are agreed in principle the court will want an outline of each party's financial position before they will be willing to approve an agreement and so without disclosure there will a problem making any agreement legally binding.  Clients are told that if a court order is made on the basis of incomplete or dishonest disclosure there is a good chance it could be set aside at a later date with possible cost orders being made against the party at fault.  Usually these explanations are enough to enable clients to move forward with providing what is necessary.  Where this cannot be achieved clients are persuaded to take legal advice on this issue in the hope that this can persuade the client to cooperate in the interests of saving the mediation.  Ultimately however clients are made aware that a failure to provide disclosure may result in the mediator having to break mediation down with the likely consequence being that matters will proceed through the courts where the court can order the provision of the information required.

    In very straightforward cases where the clients still retain trust and confidence in each other they may decide that they want to complete their forms but do not see the need to go to the lengths of providing reams and reams of documents.  In such cases our obligation is to ensure that they are aware that although the court may not insist on seeing documents in support when approving a consent order, a solicitor advising them may prefer to insist on this.  If solicitors are already instructed we urge clients to check that with their solicitor because it would save them time and money if the disclosure is provided in mediation.  Once clients are aware of this possibility they make the decision as to whether to proceed with matters as they intended and with just the basic information or whether to err on the side of caution and get everything together to go with their Open Financial Statement.  The decision is theirs but we ensure they make an informed decision.

    Our challenge in many cases is to balance the client wish for speed and simplicity with the solicitor's need for information and detail.  However our powers are limited by three of the basic mediation principles that must underpin everything we do.  The first is the voluntary nature of mediation - we cannot force a client to cooperate with disclosure in mediation.  The second is our impartiality - we cannot be the ones who question whether someone is being honest and so cannot carry out a forensic analysis ourselves.  Thirdly in mediation the clients are in control of the decision making and so all we can do is educate them as to the usual requirements and explain why certain information is needed as well as summarising the likely consequences of not providing it.


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