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Meta Fails to Block Illegal UK Finance Ads

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Meta has repeatedly failed to stop illegal advertisements for high-risk financial products in Britain, despite previously committing to block them, according to a review by the UK’s Financial Conduct Authority.

The regulator found that in a single week in November, 1,052 ads for foreign exchange trading and complex financial products appeared on Meta platforms from advertisers not authorized to promote them. More than half of those ads were linked to unauthorised advertisers the FCA had already flagged to Meta.

The findings add to growing pressure on the company to do more to stop scam-related financial promotions on Facebook, Instagram and WhatsApp. British authorities say social media platforms have become a major source of fraud targeting consumers with risky investment schemes and misleading trading offers.

The FCA said it has continued testing Meta’s systems and has not seen a meaningful improvement. Meta responded by saying it acts aggressively against fraud and removes most reported violations within days, while arguing that it has ongoing safeguards in place.

The issue is especially sensitive in Britain because regulators currently have limited power to punish platforms for paid scam ads. While the Online Safety Act is being introduced, the section allowing direct action against paid fraudulent ads is not expected to take effect until at least 2027.

The case has renewed calls for stronger enforcement and faster action from technology companies, with critics arguing that scam advertising remains too easy to run in the UK compared with countries such as Australia, where stricter financial ad verification rules already apply.

Britain Needs AI Stress Tests for Financial Services, Lawmakers Say

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British lawmakers are urging regulators to introduce artificial intelligence-specific stress tests for the financial sector, warning that current oversight is not sufficient to protect consumers or ensure market stability as AI adoption accelerates.

In a report on AI in financial services, the Treasury Committee said the Financial Conduct Authority and the Bank of England should move beyond a “wait and see” approach. The committee recommended running AI-focused stress tests to help firms prepare for potential market shocks triggered by automated systems.

Committee chair Meg Hillier said she was not confident the financial system could withstand a major AI-related incident, calling the situation worrying as increasingly autonomous systems influence decisions. Around three-quarters of UK financial firms now use AI in core functions such as insurance claims processing and credit assessments.

While acknowledging benefits, the report warned of significant risks, including opaque credit decisions, exclusion of vulnerable consumers through algorithmic targeting, fraud, and the spread of unregulated financial advice via AI chatbots. Lawmakers also highlighted potential threats to financial stability, including reliance on a small number of U.S. technology providers and the risk that AI-driven trading could amplify herding behaviour in markets.

The committee urged the FCA to issue guidance by the end of 2026 on how consumer protection rules apply to AI and what level of understanding senior managers must have of the systems they oversee. The FCA said it would review the report, while the Bank of England said it would consider the recommendations. Separately, Britain’s finance ministry appointed senior figures from Starling Bank and Lloyds Banking Group to help guide AI adoption in financial services.

SEC uncertain over approval of proposed 3x and 5x leveraged ETFs amid market risks

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The U.S. Securities and Exchange Commission (SEC) said it is “unclear” whether newly filed 3x and 5x leveraged exchange-traded funds (ETFs) will meet regulatory approval, raising questions over products that amplify returns beyond current leverage limits.

“Since the U.S. government shutdown began, the agency has received a large number of ETF registration statements seeking 3x and 5x leveraged, equity-linked exposure,” said Brian Daly, director of the SEC’s Division of Investment Management. “It is unclear whether these ETFs would comply with the Derivatives Rule (Rule 18f-4), which generally limits leverage to 2x,” he added.

The filings include 27 proposed leveraged ETFs from Volatility Shares, which submitted the first-ever 5x ETF for the U.S. market. Such funds aim to multiply daily stock returns fivefold, but carry heightened risk of losses in volatile markets.

The SEC’s limited operational capacity during the shutdown has also slowed reviews. Analysts warn that excessive leverage could expose retail investors to amplified losses.

“Over half of leveraged ETFs launched more than three years ago have closed, and 17% have lost more than 98% of their value,” said Bryan Armour, ETF analyst at Morningstar, underscoring the danger of high leverage.

Amid recent market turbulence linked to U.S.–China trade tensions, leveraged ETFs have been blamed for intensifying selloffs, with JPMorgan estimating $26 billion in forced selling last Friday alone.

The SEC said no filings will be reviewed until the shutdown ends, leaving the fate of the proposed ETFs uncertain.