A former director of professional standards for the Catholic Church has defended the practices of an internal panel that handled claims of child abuse.

A public hearing of the New South Wales Police Integrity Commission (PIC) has been considering claims the panel may have breached the state's Crimes Act by failing to pass on the full details of complaints to police.

Between 1998 and 2005, NSW Police allowed Inspector Elizabeth Cullen to join the Professional Standards Resource Group (PSRG), which dealt with abuse allegations.

The PIC has heard the intelligence-sharing arrangement may have amounted to police misconduct and enabled the church to withhold information about criminal activity within the clergy.

It today heard evidence from John Davoren, who was appointed in 1997 as the first director of the Catholic Church's Professional Standards Office.

As part of the role he supervised Towards Healing, the church's pastoral and redress scheme for victims of child sexual abuse.

Mr Davoren was also instrumental in setting up the PSRG and appointed its members to act as an advisory body.

He told the PIC that older or unsubstantiated cases of abuse were not always referred to child protection officers, nor were some cases where victims chose to keep their complaints within the church.

He said victims were always encouraged to report abuse to police, and that church "assessors" would revisit the option when the complaint was being pursued.

"We encouraged them to make the complaint themselves, or we would do it on their behalf," Mr Davoren told the hearing.

He said many assessors at the time were lawyers and retired police officers who were well-trained to discuss the matter with the complainant appropriately.

"The roundtables we had talked about the differences between criminal and non-criminal behaviour," he said.

"There was discussion about what constituted criminal behaviour, and what didn't."

PIC told intelligence sharing still in place

The PIC heard the intelligence-sharing agreement between the Catholic Church and NSW Police is still in place, despite the church being advised more than a decade ago that it breached mandatory reporting laws.

A number of draft memoranda of understanding (MOU), setting out the guidelines for the agreement, have been tabled in the commission, but the head of the church's Professional Standards Office, Michael Salmon, said no document was ever formally signed and it operated as a "protocol" or "arrangement".

"There was an arrangement between the Professional Standards Resource Group and police, that was in place when I began, that remains in place to this day," Mr Salmon said.

That arrangement is known as blind reporting, where police are only told that an allegation has been made and details about the identity of the complainant are suppressed.

Mr Salmon defended the use of blind reports, saying police were able to request additional information, or access to the complainant through a "contact person" working for the PSRG.

But a letter from the Child Protection Squad's Kim McKay to Michael McDonald at the Catholic Commission for Employment Relations, and tabled at the PIC today, stated the arrangement was illegal.

The 2003 letter was in response to Mr McDonald asking whether the unsigned memorandum of understanding with the police remained in place.

Ms McKay replied that "the draft MOU has not been approved by the NSW Police Service, and the arrangements proposed by the MOU are not currently in place".

She went on to state that "the arrangements proposed by the draft MOU appear to be in direct conflict with the explicit legislative requirement of section 316 of the Crime Act".

Section 316 of the Crimes Act states that a person who knows or believes a serious indictable offence has been committed and fails to pass that information onto police is liable and could be imprisoned for two years.

Counsel Assisting the commission, Kristina Stern, questioned Mr Salmon on whether he had ever considered whether he or the PSRG was in breach of the mandatory reporting requirement spelt out in section 316 of the Crimes Act.

"I did," he replied. "And I believe I [did] that in terms of the blind reporting."

Ms Stern yesterday questioned the use of blind reports, saying they could create a perception that the church preferred to deal with the complaints in-house.

But Mr Salmon denied that was the case, saying complainants were routinely encouraged to take their allegations to the police.

"It was the preference of the church for complainants to go to the police in the first instance," he told the commission.

The commission will continue hearing evidence until Friday.