On Thursday, April 27, the CFPB released a report which outlines a number of strategies for promoting diversity and inclusion (D&I) in the mortgage industry, presents the business case for diversity, and provides current D&I approaches and practices used by mortgage industry participants.
D&I has been a foundational principle of the CFPB since the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Specifically, Section 342 of the Act created Offices of Minority and Women Inclusion (OMWI) at all federal financial regulatory agencies, including the CFPB. OMWIs are responsible for promoting diversity and inclusion in employment and procurement practices at their own agencies, and within the financial entities they regulate. Pursuant to that mission, the April 27 report came out of a roundtable meeting from CFPB’s OMWI which included representatives from larger and smaller banks, nonbank financial companies, and federal agencies.
The report first highlights the notion that a diverse and inclusive workforce is important to help mortgage industry participants attract and retain the talent and perspective necessary to solve complex issues, create innovative solutions, and improve business outcomes.
Next, the report shares strategies and best practices for creating a D&I program, including:
- Sustaining a D&I program requires “buy-in” and accountability from leadership. A top-down approach reduces organizational resistance and causes employees to more likely understand the company’s position and be an active participant in D&I efforts. In addition, proper accountability creates a focus that directs D&I efforts to the goals set by management and enhances the organization’s likelihood of achieving its goals.
- The need to clearly define “diversity and inclusion” so that both employees and consumers can more clearly understand the broad nature of D&I programs and be able to see themselves included in such definitions.
- The need to make the business case for diversity, which includes diversifying workforces and employee bases in order to more effectively meet the needs of diverse consumers, as well as capitalize on a robust and diverse talent pool. More specifically, the report notes that when the diversity of the workforce is aligned with the demographics of targeted consumers, there is a greater likelihood of increasing business opportunities.
- The importance of data as data collection and analysis play an integral role in supporting many D&I programs. In fact, the report explains that understanding the demographics of an organization’s workforce is key to ensuring that it reflects the available talent pools as well as customer bases.
In addition to the CFBP OMWI, the Bureau plans to work with the other OMWIs to host additional roundtables that will expand upon the business case for diversity and inclusion. The report concludes by encouraging entities to develop a D&I program that best fit their needs.
Ballard Spahr’s Diversity & Inclusion Team advises clients on the design and implementation of diversity and inclusion programs and is counseling regulated entities on developing and implementing diversity programs. The team consists of Ballard Spahr lawyers from several practice groups who regularly advise financial institutions and publicly traded companies on regulatory compliance issues, including those under consumer financial services laws.