³ÉÈË¿ìÊÖ

Urgent reform of the Press Complaints Commission is needed, the chairman of the body which funds it has said.

Lord Black told the Leveson Inquiry that after the phone hacking scandal, he became aware of the regulatory system's lack of investigative powers.

"It took a scandal like that to show us we needed a new body to enforce the Editors' Code of Practice," he said.

Lord Black, an ex-PCC director, chairs the Board of Finance which collects levies from newspapers to fund the PCC.

He said he had believed the PCC had "real bite" within the industry but the hacking scandal had forced him to rethink those views.

Lord Black said he had always opposed imposing fines on newspapers, as "a matter of principle".

"I certainly now believe that some form of fining system would be appropriate," he told the inquiry.

He added that the PCC had changed in every year of its existence and the code of practice more than 30 times, but it was now time to look at it again and start from scratch.

Lord Black went on to deny that the Board of Finance exerted any control over the PCC.

"While there is a perception in some quarters that some form of control exists, that does not exist," he said.

He also denied that Tory peers exerted a superior influence on the bodies.

Lord Black, a life peer who was press secretary to former Conservative leader Michael Howard, added that the new appointment of Lord Hunt, a Tory peer, to the post of PCC chairman was not a political one.

Later, senior figures from Ofcom outlined the communications watchdog's working practices, and explained the code they used to regulate broadcasters.

Ed Richards, its chief executive, said Ofcom did not intervene before the broadcasting of programmes because it could lead you into the "area of censorship and suppression".

Mr Richards said he would expect the people that Ofcom regulated to make their own judgment about a complaint. He said, for example, that Ofcom knew the ³ÉÈË¿ìÊÖ was onto the case involving Jonathan Ross and Russell Brand at the time.

He said he believed the financial penalties that Ofcom can impose did have a "chilling effect" on the bad behaviour of broadcasters but not on investigative journalism.

"It focuses the mind, has a reputational impact, has an economic impact and is a very effective deterrent," he said.

Mr Richards said he was comfortable that Ofcom's decisions could be and sometimes were appealed against. He said the watchdog's statutory powers to investigate broadcasters were "extraordinarily" important.

Mr Richards said self-regulation worked when public interest was in line with the industry's interest. He said he was very sceptical about self-regulation otherwise.

Guy Parker, chief executive of the Advertising Standards Authority, told the inquiry that the regulator had a "variety of sanctions" if advertisers did not comply with its codes.

Mr Parker said the deterrent effect of sanctions secured more compliance by advertisers than the actual application of sanctions.

"What any good regulator will do is make sure that they threaten the sanction before they apply it and we find that if we threaten the sanction, we get compliance. We don't have to deploy it," he said.

On Tuesday, chairman of the Press Complaints Commission Lord Hunt acknowledged the need for a fresh start, saying he wanted to see the "participation of the whole industry in its own regulation".

He warned against any parliamentary move to regulate newspapers as it would "open a Pandora's box" and stifle freedom of speech.

The Leveson Inquiry was set up by Prime Minister David Cameron in July 2011 amid new revelations of phone hacking at the now-closed News of the World newspaper.

The first phase is examining the practices and ethics of the press.

The second will focus on unlawful conduct by the press and the police's initial hacking investigation, only after a police investigation into phone hacking at the NoW is complete.

The inquiry will resume on Thursday.