Written by: Eliott C. Ponte, Regulatory Compliance Counsel
Last week, the NCUA and other financial regulators issued a final interagency policy statement establishing joint standards for assessing the diversity policies and practices of the entities they regulate. It is important to note that these interagency standards for diversity policies are voluntary. The NCUA and other financial regulators are issuing this interagency policy statement to comply with Section 342 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), which requires financial regulators to develop standards for assessing the diversity policies and practices of the agencies’ regulated entities.
According to the interagency press release, these standards “provide a framework for regulated entities to create and strengthen their diversity policies and practices—including their organizational commitment to diversity, workforce and employment practices, procurement and business practices, and practices to promote transparency of organizational diversity and inclusion within the entities’ U.S. operations.” The interagency policy, which was drafted with an institution of 100 or more employees in mind, lists and explains five detailed standards. The policy also explains that the unique characteristics of the institution will determine the appropriate application of the standards to that particular institution. The standards that are discussed include:
- Organizational Commitment to Diversity and Inclusion
- Workforce Profile and Employment Practices
- Procurement and Business Practices—Supplier Diversity
- Practices to Promote Transparency of Organizational Diversity and Inclusion, and
- Entities' Self-Assessment
To view the policy statement in its entirety, click this link. Compliance officers should note that the NCUA “will not use their examination or supervisory processes in connection with these Standards.” 80 Fed. Reg. 330223. The Dodd-Frank Act does NOT grant NCUA enforcement power to require credit unions to self-assess or implement these diversity standards. Instead, these standards are only best practices, and the NCUA “encourage[s] each entity to use these Standards in a manner appropriate to its unique characteristics.” 80 Fed. Reg. 330223.