Requirement for a consolidated ICARA process under Directive (EU) 2019/2034

Does Directive (EU) 2019/2034 require investment firms that are subject to prudential consolidation under Article 7 IFR to prepare, maintain and document an ICARA process on a consolidated basis? In particular, does Article 25(4) IFD impose an obligation to perform the ICARA at consolidated level, or does it merely extend the application of Part Three without creating a standalone consolidated‑ICARA requirement?

Following the introduction of consolidated‑level ICARA fields in a national supervisory reporting template, uncertainty has arisen as to whether the IFD/IFR framework requires investment firms subject to prudential consolidation to establish and maintain an ICARA process on a consolidated basis. Article 24 IFD sets out the requirement for investment firms to perform an internal capital adequacy and risk assessment (ICARA), but does not specify that this assessment must be conducted at consolidated level. Article 25(4) IFD provides that the provisions of Part Three apply on both an individual and consolidated basis where prudential consolidation applies, but it is unclear whether this creates a standalone obligation to prepare a consolidated ICARA. To date, market practice has generally been to perform the ICARA on a solo basis, even where prudential consolidation applies, and no RTS, ITS, EBA Guidelines or other supervisory guidance appear to explicitly require a consolidated ICARA.