Newspapers should be fined if they are found to be in "systemic" breach of the standards set out in the industry's code of practice, the director of the Press Complaints Commission has conceded at the Leveson inquiry. Stephen Abell said financial penalties should be introduced as part of a new system of press regulation expected to be introduced when the Leveson inquiry makes its findings later this year. Abell told Lord Justice Leveson that a new-look regulator should "deal with complaints in a fast, economical way" but also have "a systemic role to look at issues of broad standards or internal systems that could carry with it a financial penalty". Had a system like this been in place a decade ago, the issue of phone hacking at the News of the World might have been handled better as this is now seen as a "systemic failure" of governance at the paper, he added. Abell, who submitted a 408-page statement to the inquiry – the largest so far – also said newspapers should take the prospect of statutory regulation more seriously, just as Voltaire embraced the devil on his deathbed. "It is important that the newspaper industry, that they don't just throw up their hands about statutory regulation," he said. But he defended the work of the PCC and some of its controversial decisions, including its decision to reject 25,000 complaints about a controversial column by Jan Moir in the Daily Mail about the Boyzone singer Stephen Gately, which described the events leading up to his death as "sleazy" and "less than respectable". Abell said the PCC had been the victim of "Fry bombing", after Stephen Fry directed his more than 1 million followers on Twitter to the watchdog's website. Politicians – including David Cameron and the culture secretary, Jeremy Hunt – have called for the PCC to be replaced with a new press regulator with beefed-up powers, a move that is backed by several national newspaper editors. The PCC has also faced sustained criticism at the Leveson inquiry from victims of alleged press harassment, including Kate and Gerry McCann, Charlotte Church, Sienna Miller and JK Rowling, who all said that it failed to protect them. Earlier, Abell's predecessor told the inquiry the PCC was not a regulator but merely a "complaints body", after coming under sustained criticism for not investigating phone hacking or other alleged illegal activities by newspapers during his reign between 2004 and 2009. The counsel to the inquiry, Robert Jay QC, put it to Tim Toulmin that the PCC had taken "a somewhat restrictive and timorous approach" by failing to use the powers it had. Jay said the PCC had powers to call in the former News of the World editor Andy Coulson to answer questions about alleged illegal activities on the paper but failed to do so because it did not want to test the boundaries of its powers. The former PCC director rejected this suggestion, but conceded the body was never a regulator. "Is the error everybody has made that in calling the PCC a self-regulating body it is believed that it is a regulator [by the public], when it wasn't actually a regulator at all?" Leveson asked. Toulmin replied: "Yes." Toulmin also admitted it was a "major mistake" for the PCC to say the Guardian's original 2009 revelations that News of the World phone hacking went beyond a single rogue reporter "did not quite live up to the dramatic billing they were initially given". Theguardian .