The Consumer Financial Protection Bureau’s (“CFPB”) Office of Minority and Women Inclusion (“OMWI”) has released guidance and recommendations for small, midsize, and large organizations to demonstrate their commitment to diversity and inclusion (“D&I”), taking size and resources into account. The guidance and recommendations are contained in a Report on Diversity and Inclusion (D&I) within Financial Services (the “Report”), and are designed to both support the implementation of Section 342 of the Dodd Frank Act as outlined in the Joint Standards for Assessing Diversity Policies and Practices of Entities (the “Standards”), and reflect the CFPB’s efforts to further the Biden Administration’s Executive Order on Advancing Racial Equality and Support for Underserved Communities.
The Report, which details how effectively CFPB-regulated entities demonstrate their commitment to D&I, is based on the CFPB’s FY2020 study analyzing publicly available D&I information from the websites and annual reports of 270 financial services entities. The CFPB rated the companies reviewed across 20 D&I criteria relating to:
- D&I statements on the website or from senior leadership;
- Published workforce diversity metrics;
- Published D&I recruitment strategies;
- D&I trainings or employee resource groups; and
- Supplier diversity programs.
Each entity reviewed was rated as low, medium, or high, depending on the level of information shared publicly across the indicators, which track the Standards four focus areas: (i) Organizational Commitment to Diversity and Inclusion; (ii) Workforce Profile and Employment Practice; (iii) Supplier Diversity; and (iv) Practices to Promote Transparency of Organizational Diversity and Inclusion.
The Report serves as a means for entities regulated by the CFPB to self-assess the state of their own D&I initiatives, and identify areas for growth. The data trends indicated that most small organizations (with under 1,000 employees) had fewer D&I programs and policies, while large organizations (with over 5,000 employees), and banks in particular, consistently outperformed all other institutions in the industry across the diversity indicators. The Report also identified the greatest opportunity for improvement in the mortgage industry, which likely will be an area of focus for the OMWI moving forward.
Based on the data, the CFPB makes best practices recommendations in the Report for an organization to improve the D&I information that is available to the public. The CFPB’s recommendations take into account access to resources, providing a tailored checklist for organizations of all sizes to implement D&I initiatives. The Report also notes that the CFPB will continue its research into regulated entities and track their progress against these recommendations on an annual basis.
Ballard Spahr’s Consumer Financial Services Group and Diversity, Equity, and Inclusion Counseling Team have deep experience with assessing, designing, and implementing programs, policies, and initiatives identified in the Report and specific to the Consumer Finance industry.