Study: do enforceable undertakings work?

The Australian Securities and Investments Commission (ASIC) has unveiled a research pilot into enforceable undertakings (EUs) and how much of a deterrent they actually are on peer financial services and credit providers. The study was conducted by the Law Faculty at the University of New South Wales (UNSW) and reported by Professor Dimity Kingsford-Smith.

The study was conducted to see what sort - if any - deterrent effect an EU had in changing provider behaviour, and provide a report to ASIC.

Key findings of the study

Most providers interviewed felt a deterrent effect of an EU entered into by competitors, with motivations to keep away from an EU including keeping prying eyes out of the company, avoiding penalties, avoiding costly financial penalties, and avoiding reputational damage.

More research projects were identified, with a scoping study on potential options for further research into the impacts of EUs and other sorts of regulatory actions proposed.

Study methodology

The study was designed around general deterrence theory. There isn’t a great deal of research into deterring corporate crime, with most available research into crimes against people or property, not a regulator or financial service. What research is available, the researchers say, is contextual and hard to apply to financial services and not specifically applicable to EUs.

Read the full report