A leading media pundit has argued that regional newspaper publishers could boycott any new system of press regulation introduced in the wake of the Leveson report.

Days after ministers published their plan for a Royal Charter to oversee the industry, Guardian blogger Roy Greenslade has suggested that regional newspaper owners may walk away rather than face the prospect of big payouts under the proposed system of legal arbitration.

In a blog post published today, Roy quotes an unnamed journalist who argues that there is nothing in the proposed new system for regional publishers and that they could simply refuse to take part.

It follows concerns expressed last week by Kevin Ward, editor of the South Wales Argus, about the potential costs of handling “spurious complaints driven by people seeing pound signs before their eyes.”

At issue is the proposed “low-cost” system of arbitration, proposed partly in order to reduce the likelihood of expensive libel actions.

However although it will reduce libel bills, some regional editors believe that complainants who until now have used the PCC to resolve complaints against newspapers through the publication of apologies and corrections will choose to use the arbitration system to pursue financial settlements.

Kevin last week described the idea as “a double whammy for smaller local newspapers that do not benefit from the resources enjoyed by the nationals.”

However some industry leaders have latched onto the Royal Charter plan as the only politically viable alternative to statutory regulation, which is still favoured by the Labour Party.

Society of Editors executive director Bob Satchwell defended the plan this weekend after it was criticised by Gerry and Kate McCann as a “compromise of a compromise.”

Said Bob:  “Everyone has sympathy with the Kate and Gerry McCann and they were quite correctly compensated under existing libel laws. They are however wrong to think that the tough new self regulatory regime requires a statute.

“Lord Justice Leveson recognised that the vast majority of journalists were blameless but all will face new and powerful regulation. There are complex practical and legal issues in implementing the new system but the Leveson pathway will be closely followed.

“That is what the Royal Charter plan is trying to achieve so that the principles of the new system agreed more than a year ago by the industry, even before Lord Justice Leveson reported, can be implemented quickly, hopefully by the middle of this year.”