Financial Conduct Authority (FCA) UK Regulation Sample Exam

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After receiving an instruction from a third party IFA, when must a firm report the transaction to the client?

Within two business days
By the end of the following day
Within a week
At the end of the month

The correct answer is: By the end of the following day

The requirement for a firm to report a transaction to the client after receiving an instruction from a third-party Independent Financial Advisor (IFA) is important for ensuring transparency and timely communication with clients. Reporting by the end of the following day reflects regulatory expectations for consumer protection. This timeframe allows the client to be promptly informed about transactions that affect their investments or finances, enabling them to make timely decisions if needed. In contrast, longer reporting periods such as within a week or at the end of the month do not align with the regulatory emphasis on real-time information, which is critical for fostering trust and ensuring clients are not left uninformed about their investments. This timely notification also helps to address any potential issues or errors quickly, enhancing the overall integrity and reliability of the financial services provided.