Examination of witnesses (Questions 540
- 549)
WEDNESDAY 16 SEPTEMBER 1998
MRS
SALLIE
QUIN
and MRS
MARY
SINFIELD
Ms Stuart
540. Clearly this is an attempt to conceal
if you come across it but how often do you come across this problem
for your membership? How acute a problem is it?
(Mrs Quin) Very common. If you think about it, the person
who is the salary earner, who is out there in the workplace, has
got access to banks, to other people, they are in the thick of
it. The one who is caring and who sits at home has got nothing.
We had one member who had to be taught by her bank manager how
to write a cheque when her husband left her.
(Mrs Sinfield) Bringing it to pension sharing, because
solicitors are not trained and do not know that you can go to
the fund it is quite commonly the case that the person with the
pensions will not provide the information about it at all and
just sits on their hands. In earmarking we are very much afraid
that there will be movement of the money around to ensure that
somehow or other the amount is devalued. In terms of pensions
where people have got multiple pensions over time because of the
tendency to portfolio careers, we are very much afraid that pensions
will be hidden, that only some of the pensions will be disclosed
and not all of them. Again, on the other side, being fair to both
parties in this, the Inland Revenue practice where they are going
to restrict the amount by reference to what the wife is getting,
one can see over time that might be a means of concealing money
on the wife's side. We do not want any unfairness in this at all.
It does seem to me that this is the sort of thing where in terms
of Inland Revenue practice it could be made by regulation that
both parties must declare everything on their income tax return
and the Inland Revenue have got the technology to be able to cross-refer
that so there will be no contact between the two parties, they
can each go their separate way with a clean break, and yet the
Inland Revenue and the Treasury will get its pound of flesh and
nobody will have the opportunity to hide the money. Where people
do hide the money, again you have got to discover it and when
you do discover it all that often happened in the past was that
people felt very, very aggrieved and betrayed but did not know
what to do about it.
541. I can see that you could put a system
in place to track current pension contributions in the schemes
because of the current taxation legislation but where a policy
has been paid up and may be paid out much later I think it would
be very difficult at the moment to track that system, unless we
say that ten years down the line when this comes to be cashed
in this system could say "this money has never been declared".
I am trying to think of the practicalities of this.
(Mrs Sinfield) As with most assets they only are disclosed
under different circumstances at some stage in the future. The
only way you can talk about disclosure is where it is discovered
very shortly after the divorce or in the divorce process itself
once the whole thing has been tied up in the agreement. I think
in the long-term you can never really make provision.
542. Do you think there is a danger that
courts will delay granting a decree absolute before financial
arrangements are in place, that this has now become such a lengthy
process therefore they are dragging out the divorcing process
even longer?
(Mrs Quin) This comes back to the earlier question that
you get the court order saying he has to pay you three policies
and x thousand pounds or whatever and then he gets his absolute
and off he goes and that is the last you hear about it. If you
are on Legal Aid you cannot get a reinforcement to go back to
court to get that order. It is a vicious circle. We believe that
if people do want to go off and get married then one way to make
sure that you get the financial things settled is to insist that
they are set in place irrevocably before he or she goes off to
get married.
(Mrs Sinfield) Remember, remarriage is a personal choice,
it is something totally outwith the divorce action. I listen to
all these arguments that say "What about if the husband gets
remarried? What is going to happen to his second wife?" I
have little sympathy with that because it is no part of the first
divorce action, it is a personal choice that comes subsequent
to the event of the divorce. Deal with one before you start looking
at the other one.
543. Can I pick you up on this. In earlier
evidence in response to Edward Leigh you were talking about Mesher
Orders and you were supporting the notion of looking at the pension
value at the point of selling the house when the youngest child
is of age. You are absolutely right, it is a choice to remarry,
but if we extend this process of decision making within divorce
we are virtually saying "within that period you cannot make
a decision to remarry because there may be subsequent financial
consequences." I am feeling very uncomfortable.
(Mrs Quin) If all the other assets have been dealt with
outwith of the house and pension, I do not see that is a problem.
(Mrs Sinfield) The percentage is settled at the time
of the order. All you are talking about is the valuation. What
you are saying is "based on the values we have got now, we
think the percentage ought to be so and so, but we will look at
this again to see whether at a point in the future there has been
any material change by which we can revisit it". In the majority
of cases that will not happen at all, it will only happen really
where there are small children involved and they grow up, and
surely that is the important thing, that those children are protected
all the way through by having a family home but at the end of
it the spouse who is looking after the children—the sex
is irrelevant—will at least know that their position will
be protected at that time and they are not suddenly bereft of
children and everything else.
544. Just one final question on this and
that is dealing with a particular group of people and that is
the self-employed. If you are on PAYE then your income is fairly
transparent. The way tax returns are designed for the self-employed
they are designed to be tax efficient and probably under-estimate
assets in some way. Again, drawing on the experience of your members,
do you find that is a particular problem, that you end up under-estimating
the genuine assets available to provide for the ex-spouse and
children?
(Mrs Quin) Yes.
545. Would you like to expand?
(Mrs Quin) Self-employed specifically. It is amazing
the number of people who have very, very flourishing businesses
until they want to get divorced and they hit terrible problems
and a year later the business is flourishing again. This happens
over and over. We actually have people who have quit their jobs
so they can go to court and say "I am unemployed, I only
have benefit to live on, I cannot afford to pay anything"
and a year later they have got their old job back. This happens
more frequently than you would believe.
(Mrs Sinfield) Particularly for businesses. The insolvency
provisions actually encourage this. We have had a great many members
where over time the husband has transferred money to some other
business elsewhere and milked the business in which he is involved
with his wife as self-employed people and simply syphoned off
the money that way.
546. Are you saying that in your experience
some of your members have been in situations where the divorcing
partner has become insolvent?
(Mrs Sinfield) Yes, we have.
547. Because one of the issues which we
have been raising is to what extent can trustees in bankruptcy
access personal pensions, hence my reference to the Landau case,
because it is unclear as to the position. I am interested to hear
of cases you know of where this has happened.
(Mrs Sinfield) I am sure that members involved will be
very pleased to give you the information.
(Mrs Quin) We will make sure that we get letters from
them.
548. Particularly insolvency, that would
be very useful. Thank you very much.
(Mrs Quin) Also insolvency after the case so they cannot
pay any of the costs or any of the orders that have been made
against them. In the case of an occupational pension for a child
a maintenance order is sacrosanct, it is ring-fenced, but all
the other bits on the court order it would appear are not.
Chairman
549. Finally, you mentioned earlier the
process that we are going through, this consultative stage prior
to the legislative process starting here, is useful. It is a new
area of activity for the Select Committee too. Would you like
to say a word about how you have found that and whether it is
really helpful, how it can be improved? How have you found the
process as it has unfolded, culminating in your paper to us and
the evidence session this morning? Is there anything you can contribute?
Can we do it better? Have you any ideas about that?
(Mrs Sinfield) It has been extremely helpful because
we have not felt rushed in all of this. We feel that we have had
the time to go and ask our members to get information in and that
at the end of the day there is a proper scrutiny of what is going
on. What has been really heartening to us has been to read the
previous evidence and find out that we are not out there on a
limb, that other people do think the same way as we do. We very
much appreciate being able to appear in front of you and the DSS
which has listened.
(Mrs Quin) It has given us a voice which is something
that in the past has never happened.
Chairman: Excellent.
Can I thank you both very much indeed, it has been a very interesting
and helpful session. I know it takes a lot of work and we are
grateful for your written evidence but particularly your appearance
before us this morning. Thank you so much for coming.
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