Election finance rules should be tightened to reduce the potential of foreign actors using digital campaigning to exert influence in the UK, according to a sleaze watchdog.

The independent Committee on Standards in Public Life (CSPL) has published 47 recommendations following a year-long review into the regulation and enforcement of donations and campaign expenditure in elections.

It comes after concerns over whether the current regulation framework  is transparent and proportionate enough for the digital landscape, which has revolutionised the way parties and campaigners engage with voters.

CSPL said the recommendations in the report aim to modernise the current system and “increase the effectiveness of electoral regulation” – more than 20 years since the Electoral Commission was established in 1998.

In the 164-page report, it recommends rules explicitly banning spending on campaign advertising by foreign individuals or organisations, to address the risk of foreign sources using digital campaigning to exert influence in the UK.

It says: “In line with the principle of no foreign interference in UK elections, the Government should legislate to ban foreign organisations or individuals from buying campaign advertising in the UK.”

This is set to be addressed by the Government in the upcoming Elections Bill, which will change the law so that only UK-based sources can spend money campaigning in UK elections.

The committee, which advises the Prime Minister on ethical standards across public life in the UK, suggests a series of updates to the Political Parties, Elections and Referendums Act 2000 (Ppera).

Among these is changing it to require parties and non-party campaigners to have appropriate procedures in place to determine the “true source” of donations.

The committee also recommends amending Ppera to provide specific clarification that to be a permissible donor, an individual must be on a UK electoral register.

It also recommends changing reporting deadlines for parties and non-party campaigners spending over £250,000 at a general election or UK referendum, from six months to four months.

The committee’s review considered how the Electoral Commission, police and Crown Prosecution Service enforce and regulate donations and campaign expenditure.

It said that while criminal sanctions remain necessary for serious breaches, it suggests that a civil sanction may be the more appropriate route for breaches as a result of an inadvertent error.

Launching the report, committee chairman Lord Evans said: “The system for regulating election spending must be robust enough to prevent real abuse, but not deter or prevent smaller parties and individuals from taking part.

“We need effective rules that ensure fairness without designing a system so complex and demanding that it deters those who cannot rely on the support of well-resourced party machinery.

“Reforms are needed to address modern campaign practices, meet emerging threats around the source of donations deliver greater transparency and enhance compliance with election finance law.”

A Cabinet Office spokeswoman said: “We will read the report with interest. Our new Elections Bill will protect our electoral system for the future, with new measures to make it even more transparent, tackle intimidation and prevent foreign interference.

“The UK already has a comprehensive regulatory framework which governs the spending and funding of candidates, political parties and campaigners.

“This Bill will further strengthen that, ensuring it is clearer to voters who is spending money campaigning in our elections.”