On 25 July 2023, the European Banking Authority (EBA) published a consultation paper setting out draft guidelines on the application of the group capital test for investment firm groups in accordance with Article 8 of the Investment Firms Regulation (IFR).

The guidelines aim to set harmonised criteria to address the observed diversity in the application of the group capital test across the EU. In particular, the guidelines identify criteria to assist competent authorities in their assessment of the simplicity of the group structure and the significance of the risk posed to clients and the market.

The guidelines set qualitative and quantitative criteria that competent authorities should consider for the purpose of assessing whether the conditions set out in the IFR for receiving permission to use the group capital test are met.

The consultation includes several questions addressed to the relevant stakeholders to gather feedback around the proposed methodology and criteria.

The deadline for feedback to this consultation is 25 October 2023.