WASHINGTON (6/10/15)--The National Credit Union Administration and federal banking regulators Tuesday issued their final interagency policy statement establishing joint standards for assessing diversity policies and practices of the institutions they regulate.
Required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the statement applies to those regulated by NCUA, the Federal Reserve Board, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, and the Securities and Exchange Commission.
Each agency was required to establish an Office of Minority and Women Inclusion (OMWI), responsible for all diversity matters in management, employment and business activities. The act also instructed that each OMWI director develop standards for assessing diversity policies and practices of the entities regulated by the agencies.
The final standards are similar to the proposed standards and provide a framework for regulated entities to create and strengthen their diversity policies and practices, the agencies said. These include their organizational commitment to diversity, workforce and employment practices, procurement and business practices, and practices promoting transparency of organizational diversity and inclusion within the entities’ U.S. operations.
The agencies’ assessments of regulated entities’ diversity policies will not be a part of the examination or supervisory process. Instead, they will rely on a “model assessment” that would include a self-assessment by the entity. Financial institutions’ self-assessment would use the proposed standards, voluntary disclosure of their assessment to the regulator, and publication of their diversity efforts to increase public awareness and understanding.
The entities “are in the best position to assess their own diversity policies and practices,” the policy stated, adding that “self-assessments can provide entities with an opportunity to focus on areas of strength and weakness in their own policies and programs.” The agencies will periodically review the public information and reach out to the institutions to discuss diversity and inclusion.
The policy reflects more than 200 comments submitted on the proposed standards that were issued in 2013.
Standards may be tailored and used in a manner reflective of the institution’s size and other characteristics. “The agencies recognize that each entity is unique with respect to characteristics such as its size, location, and structure,” the policy said.
The policy indicated that the Dodd-Frank Act states the directive to develop standards may not be construed to mandate any requirement on or otherwise affect the lending policies and practices of the institution regulated or require specific action based on the findings of the assessment. “This document is a general statement of policy under the Administrative Procedure Act, 5 U.S.C. 533. It does not create new legal obligations. Use of the standards by a regulated entity is voluntary,” said the policy.
“Diversity” is defined as women and minorities (Black Americans, Native Americans, Hispanic Americans and Asian Americans). The policy does not preclude an entity from using a broader definition related to the standards.
“Inclusion” is defined as “a process to create and maintain a positive work environment that values individual similarities and differences, so that all can reach their potential and maximize their contributions to an organization.”
The agencies also:
The agencies addressed a number of issues raised in CUNA's February 2014 comment letter. In particular, CUNA recommended that the final standard adopt a self-assessment approach.
“While we strongly favor a self-assessment approach over an examination-based approach, . . . even self-assessment under the proposed standard is likely to be quite burdensome for many credit unions, including those already reporting diversity data to the EEOC,” noted CUNA’s comment letter.
CUNA, together with its Examination and Supervision Subcommittee, will be analyzing the joint final standard in detail and is willing to work with credit unions that experience examiner-related issues with their self-assessments.