The Australian Prudential Regulation Authority (APRA) has bowed to criticism of its approach to poor conduct following the Hayne royal commission and will review its processes.

Chairman Wayne Byres says APRA and other supervisors have traditionally examined conduct as an indicator of risk, rather than a direct prudential threat, unless it is likely to jeopardise a system’s or institution’s stability.

“We will clearly need to reflect on that approach,” he told a Financial Services Institute of Australasia summit in Sydney on Thursday.

The royal commission has suggested regulators should do more to enforce behaviour standards and punish breaches.

“Based on what has been revealed, that is a quite reasonable conclusion to reach,” Mr Byres said.

He notes financial services is still not seen as a profession in the same way as medicine, engineering, accounting or teaching.

“There is no defined body of knowledge or high entry standards for those who perform key roles. Where codes of conduct exist, they are often totally voluntary. And on the evidence before the royal commission, the balance between self-interest, company interest and serving the community’s interest has not always been appropriately struck.”

Mr Byres says APRA will give a full response to the royal commission, which released an interim report last month, through submissions and evidence.