On June 9, 2015, the Federal Reserve Board, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission issued final standards for diversity polices at monitored banks and financial institutions, creating a new system to monitor diversity in the financial industry. These new standards are a product of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, which directed each agency to develop standards for assessing the diversity policies and practices of their regulated entities.
The final standards, which largely mirror the standards proposed in 2013, detail steps for financial institutions to improve diversity practices, including hiring and workplace management practices with respect to women and minorities. Among other things, the standards recommend as follows:
- The financial institution include diversity and inclusion considerations in employment and contracting as a part of its strategic plan for recruiting, hiring, retention, and promotion;
- The financial institution have a diversity and inclusion policy;
- The financial institution provide regular progress reports to the board and senior management;
- The financial institution conduct regular training on equal employment opportunity and on diversity and inclusion;
- The financial institution have a senior level official who oversees and directs the entity's diversity and inclusion efforts;
- The financial institution take proactive steps to promote a diverse pool of candidates, including women and minorities, in its hiring, recruiting, retention, and promotion, as well as in its selection of board members, senior management, and other senior leadership positions;
- The financial institution utilizes both quantitative and qualitative measurements to assess its workforce diversity and inclusion efforts;
- The financial institution have a supplier diversity policy that provides for a fair opportunity for minority-owned and women-owned businesses to compete for procurement of business goods and services;
- The financial institution have practices to promote a diverse supplier pool;
- The financial institution annually publish its diversity and inclusion strategic plan, its policy on its commitment to diversity and inclusion, its progress toward achieving diversity and inclusion in its workforce and procurement activities, and any opportunities available at the entity that promote diversity (including current employment and procurement opportunities and forecasts of potential employment and procurement opportunities).
The standards officially define "diversity" as women and minorities, but advise that this does not preclude an entity from using a broader definition.
Most notably, these new standards do not create any legal obligations for financial institutions; use of the standards by a regulated institution is strictly voluntary and is not part of the agencies’ examination or supervision process. Rather, financial institutions are expected to conduct a “self-assessment,” which includes voluntary disclosure of practices and publication of diversity efforts. The agencies will use the information submitted to them to monitor progress and trends in the financial industry with regard to diversity and inclusion and to identify and highlight policies and practices that have been successful within certain institutions.
In drafting the standards, the federal agencies focused primarily on institutions with more than 100 employees. In the finalized standard, the agencies acknowledged that certain financial institutions that are small or located in remote areas may “face different challenges and have different options available to them compared to entities that are larger or located in more urban areas,” and thus encouraged each institution to use the standards “in a manner appropriate to its unique characteristics.”