Enforceable undertakings imposed by the Australian Securities and Investments Commission (ASIC) are deterring bad behaviour, according to a University of NSW study.

An enforceable undertaking is a contract between ASIC and a financial services or credit provider, and is an alternative to civil or administrative action for breaches of legislation.

ASIC commissioned the study last year to assess whether such measures are effective.

“There has been controversy about the effectiveness of enforceable undertakings in deterring competitors of financial services and credit providers in the financial sector,” study leader Dimity Kingsford-Smith said.

“The clear finding of the study, which we did not anticipate, is that a majority of interviewees reported their organisation being deterred by enforceable undertakings with their competitors.”

Interviewees say the perceived effects of harsh sanctions, intrusion by outsiders and financial and time costs are among enforceable undertakings’ effective measures.

About 57% of the 165 enforceable undertakings from 2010 to last year relate to financial services, 15% consumer credit and 26% disclosure obligations.

The study included  Combined Insurance, a unit of Ace Insurance whose authorised representatives were found overselling policies, churning policies and selling unsuitable products.

Its enforceable undertaking with ASIC involved changing the business model and other corrective action. The company ceased writing new business in the Australian market in April 2016.