The Securities and Futures Commission (SFC) of Hong Kong should be subject to internal checks and monitoring by a community-based committee, the city's top prosecutor said yesterday.

Director of public prosecutions Kevin Zervos, who earlier called for the investigatory body to be stripped of its powers to prosecute, said that at the very least the SFC should be appropriately regulated, to ensure proper use of its powers and to prevent any internal misappropriation.

"It is natural when you have a body that has an investigatory function that they will be very committed to the case they are involved in," he told local media at the offices of the Department of Justice (DoJ).

"But I find some difficulty when you give major prosecution decision-making powers to a body that has extensive coercive powers.

"I think they should have the same sorts of mechanisms available to appropriately regulate their powers, and conduct and deal with any possible breaches. So that requires appropriate internal regulation… and an appropriate outside body, not that comes from the industry but that is community-based.

"I think having a community-based, outside committee [would provide] a very important check to make sure powers are being used fully and properly."

Zervos, who will step down from his role in September, was expanding on comments he made in the city's Prosecutions 2012 report, released earlier this month.

In the report, he wrote that it was a matter of some concern that a law enforcement agency had responsibility for prosecution, and that this had caused tension between the prosecutions division and the SFC. He also said that the SFC lacked appropriate internal regulation and policing, and it would be preferable if it was stripped of its prosecutorial responsibility – which would be better placed with an independent prosecution service.

"If there is criminal wrong-doing it should be dealt with by the courts," he added at the media briefing.

"Investigators investigate, prosecutors prosecute… We as a prosecutions service provide a very important check to law enforcement…We are able to look at things more objectively."

Asked if he thought this could reduce the number of investigations and criminal convictions of financial institutions in Hong Kong, Zervos said he didn't believe it would, and if anything, the numbers could increase.

He added that the market would also benefit from the SFC working in tandem with other specialist law enforcement agencies depending on the scope of criminal activity being investigated.

The SFC is an independent statutory body established in 1989 to regulate the securities and futures markets in Hong Kong in accordance with the Securities and Futures Ordinance (SFO).

It monitors a mix of brokers, investment advisers, fund managers and listed companies, as well as the Hong Kong stock exchange and its investors.

The current CEO is Ashley Alder, the former head of Asia for Herbert Smith Freehills, who left private practice to work for the SFC in October 2011.

Both Alder and the SFC were unavailable for comment.

Finally, Zervos stressed the importance of class actions as a way of allowing individual rights to be properly represented in the courts.

In January this year, a working group met to discuss the possibility of introducing class actions in Hong Kong, to create further options for multi-party disputes in the city.

"As a lawyer, I believe in them," Zervos said. "In appropriate types of cases they are necessary and effective. I think [they] should be encouraged."

Related: Hong Kong's DPP defends unqualified court prosecutors.