Channel TV has said it is "dismayed" that ITV plc is to bring in a system of "double compliance" for shows after the network cast doubt on the smaller Channel 3 franchise holder's ability to vet programmes.

The ITV franchise holder for the Channel Islands makes revenue from providing legal compliance services for a major ITV1 shows such as The X Factor, Britain's Got Talent and The British Comedy Awards.

However, after Ofcom said today it would introduce tougher financial penalties for shows that breach the broadcasting code, ITV plc responded by saying that in future all network programmes would be checked again by its in-house team as it had "a lack of confidence in the compliance procedures of Channel Television".

Channel TV strongly criticised ITV's response, saying: "We are dismayed that our colleagues in ITV have seen fit to call into question our record ... [with ITV] only last year ... described by Ofcom as having a "completely inadequate compliance system" as demonstrated by the programmes they made and complied including Soapstar Superstar, Ant and Dec's Saturday Night Takeaway and Ant & Dec's Gameshow Marathon," the broadcaster said.

"In marked contrast to ITV, Channel has yet to be penalised for compliance failures, although expects a penalty with regard to one show after nine years of complying some of the biggest programmes on ITV such as The X Factor and Britain's Got Talent."

An ITV plc source said that compliance should not be seen as a money-spinner and should be aimed at ensuring programmes were of a high standard.

"Compliance should not be a competitive, free market business. The fact that Channel see it that way should send alarm bells ringing across the industry," the ITV source added.

"Compliance should be an at-cost service for producers, delivering high quality, security and probity for viewers. ITV has put in place stringent compliance measures since the Deloitte Report [into failings] which are industry gold standard. We comply thousands of hours of programming for ITV1 and all our digital channels. Our ratio of breaches against hours of programming complied is minuscule compared to other licensees."

The new Ofcom plans could leave ITV open to massive fines if ITV1 network shows are found to have breached the broadcasting code.

Ofcom has the power to fine TV companies that break the code up to 5% of their "qualifying revenue", which for ITV plc – which owns all 11 Channel 3 regional licences in England and Wales, out of a UK total of 15 – could be as much as £75m overall.

The regulator has only previously been able to fine the individual licensee responsible for legal compliance of shows with its broadcast code.

ITV plc said that because of its size the move could mean it is liable for up to 92% of any fine for ITV1 network TV shows that breach Ofcom's regulations.

"The [Ofcom] review leaves in place the ability for producers commissioned by the ITV Network to choose which compliance licensee they use, which includes ITV licensees not owned or controlled by ITV plc," said a spokesman for ITV. "As a result ITV plc is now obliged to take steps to protect itself from exposure to sanctions arising from compliance processes in respect of which it currently has no control, and little visibility."

ITV said that it has a "lack of confidence" in Channel TV, the main alternative licensee used by programme makers for compliance of ITV1 network shows.

Channel TV has been responsible for compliance for ITV1 network shows that have broken Ofcom's broadcast code, including the British Comedy Awards, The Alan Titchmarsh Show, Beat: Life on the Street and the sponsorship credits for The X Factor.

Ofcom moved to update the sanction regulations following a review that concluded that the fines levied over TV phone-in deceptions were not hefty enough.

The regulator fined ITV a record £5.675m last year, for "seriously and repeatedly misleading its audience" on 86 separate occasions over four years, causing viewers to waste £7.8m on premium rate calls. The shows involved included Ant and Dec's Saturday Night Takeaway, Ant and Dec's Gameshow Marathon and Soapstar Superstar.

Because the ITV network is made up of 15 separate regional franchises with individual Ofcom licences, the regulator has only previously been able to fine up to 5% of the revenues of the individual licensee responsible for legal compliance with its broadcast code.

Channel TV, the ITV licence holder for the Channel Islands, has qualifying revenue of about £4m, and Ofcom could only impose of maximum fine of £200,000.

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