The City watchdog has pledged to use post-Brexit powers to crack down on tech giants such as Google over online fraud.
The Financial Conduct Authority (FCA) has warned platforms they must do more to block scam adverts following a surge in cases during the pandemic.
The regulator added it would not hesitate to take tough legal action against companies that failed to address the issue, using stricter rules made possible by Britain’s departure from the EU.
“If they can’t comply, we’re going to have to do something about it in a more formal way,” said Mark Steward, director of enforcement and market oversight at the FCA.
Speaking in front of the Treasury select committee, Steward confirmed that this would mean legal action, the Telegraph reported.
The warning comes after lockdown fuelled a rise in the number of scammers trying to take advantage of unsuspecting victims online.
In the last year, more than 700,000 online scams totalling 1.4 million URLs were removed from the internet, according to the National Cyber Security Centre.
Many social media firms and search engines are used by financial services companies to promote their service, though there are miminial checks to determine if the product is a scam.
Financial promotions can only be issued by FCA-approved firms. However, a loophole in EU laws meant these rules did not apply to many foreign tech companies.
Now Brexit has granted the City watchdog with greater powers to crack down on online fraud. The FCA has previously said it will use a so-called dragnet approach to capture suspicious advertising within 24 hours of it appearing online.
Some MPs have also called for scams to be included in the upcoming Online Safety Bill, which aims to hold tech firms responsible for the material that appears on their platforms.
But Stewart said he was concerned about the scope of the bill, saying there was “no mechanism for social media to be legally obligated to do some very basic things that don’t happen now”.
A spokesman for Google said: “Protecting consumers and legitimate businesses operating in the financial sector is a priority for us.
“We have been working in consultation with the FCA for over a year to implement new measures and we are developing further restrictions to financial services advertising to tackle the scale of this issue.
“To help protect people from financial fraud in the UK, we have pledged $5m in advertising credits to support public awareness campaigns.”