CFPB Sends Letters Inviting Submission of Diversity and Inclusion Self-Assessments
We recently learned that several clients have received letters from the CFPB’s Office of Minority and Women Inclusion (OMWI) indicating that the Bureau will be inviting them to submit a self-assessment of their diversity and inclusion (D&I) policies and practices and requesting contact information for the individuals leading their D&I efforts.
The letters reference the D&I standards issued in June 2015 by the CFPB’s OMWI and the OMWIs of the other federal financial regulatory agencies to implement Section 342 of the Dodd-Frank Act. Those standards contemplated that a regulated entity would, on a voluntary basis, conduct an annual “self-assessment” of its D&I policies and practices and submit the assessment to the Director of the OMWI of its primary federal financial regulator. The standards also indicated that the agencies would not use their examination or supervisory processes in connection with the standards but instead envisioned that the agencies would use the information submitted to them to monitor progress and trends in the financial services industry with regard to D&I in employment and contracting activities, identify and highlight policies and practices that have been successful, and potentially publish best practices based on information provided to them.
Nothing in the CFPB’s letters appears to be inconsistent with the standards (e.g. they note that a D&I self-assessment is voluntary, is outside of the supervisory process, and will be used to inform the industry and develop best practices). However, by sending these letters and noting in them that Director Kraninger supports the work of the CFPB’s OMWI, the CFPB is sending a strong signal to industry that D&I policies and practices will be a Bureau focus under Director Kraninger’s leadership. In addition, as we recently reported, one of the first actions taken by Democratic Congresswoman Maxine Waters upon becoming Chairwoman of the House Financial Services Committee was to announce the creation of a new D&I subcommittee. The CFPB’s letters and the creation of the subcommittee signal that financial institutions are likely to find their D&I policies the subject of greater attention and scrutiny in the coming months.
A financial institution should consult legal counsel in determining whether to undertake a self-assessment, publicly disclose information regarding an assessment, or submit an assessment to its regulator.