Six federal agencies have proposed joint standards for assessing the diversity policies and practices of regulated entities relating to employment and contracting with third parties. The proposal was developed by the agencies’ Offices of Minority and Women Inclusion (OMWI).

The Dodd-Frank Act directed the Consumer Financial Protection Bureau, Office of the Comptroller of the Currency, Federal Reserve Board of Governors, Federal Deposit Insurance Corporation, National Credit Union Administration, and Securities and Exchange Commission (Agencies) to establish an OMWI. The Act also required each Agency’s OMWI to develop assessment standards for the entities the Agency regulates.

As discussed below, the proposal contemplates that regulated entities will use the standards to conduct self-assessments. Such self-assessments could involve a substantial amount of work for regulated entities. In addition, because the self-assessments could be potentially discoverable by private plaintiffs in fair lending and fair employment litigation, it will be prudent for regulated entities to conduct them with the assistance of legal counsel.  

The standards, which may be tailored to take into account a regulated entity’s size and other particular characteristics, deal with four areas: 

  • Organizational commitment to diversity and inclusion, such as whether a regulated entity makes diversity and inclusion considerations in employment and contracting an important component of its strategic plan, has a diversity and inclusion policy that is approved and supported by senior management and the board of directors and overseen by a senior level official, and conducts equal employment and diversity education and training on a regular and periodic basis 
  • Workforce profile and employment practices, such as whether a regulated entity is using metrics (such as required filings with the Equal Employment Opportunity Commission) to evaluate and assess workforce diversity and inclusion efforts, holds management accountable for such efforts, and has policies and practices, such as outreach to minority and women organizations, that create diverse applicant pools for internal and external opportunities
  • Procurement and business practices and supplier diversity, such as whether a regulated entity has a supplier diversity policy that provides opportunities for minority- and women-owned businesses to compete in procurements, methods to evaluate and assess supplier diversity, and practices to promote a diverse supplier pool such as outreach to minority- and women-owned contractors
  • Practices to promote transparency of organizational diversity and inclusion, which consider whether a regulated entity makes information about its diversity and inclusion activities publicly available on an annual basis through its website or another method

A surprising aspect of the proposal is the Agencies’ plans for conducting assessments. According to the Agencies, “the assessment [they envision] is not one of a traditional examination or other supervisory assessment. Thus, the Agencies will not use the examination or supervision process in connection with these proposed standards.” The proposal contemplates an assessment that includes: 

  • A self-assessment in which a regulated entity uses the Agencies’ standards to conduct a quantitative and qualitative evaluation of its diversity and inclusion policies and practices

  • The entity’s voluntary disclosure of the self-assessment results to the appropriate Agency

  • The entity’s disclosure of information about its efforts to comply with the standards on its website and in annual reports and other materials

The proposal does not address what actions the Agencies plan to take if an entity’s diversity and inclusion policies and practices are found to be unsatisfactory. Since the Dodd-Frank Act is silent regarding the Agencies’ authority in such circumstances, the Agencies could take the position that they have discretion to take whatever action they deem appropriate, including conducting a more rigorous fair lending examination of an entity that engages in lending.

In addition to seeking comments on the proposal generally, the Agencies are seeking comments on specific questions set forth in the proposal. Comments are due by December 24, 2013.

Ballard Spahr’s Consumer Financial Services Group is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws, and its skill in litigation defense and avoidance. Attorneys in the firm's Labor and Employment Group advise clients on diversity policies and practices, conduct reviews, audits, and related training, and provide action plan development and implementation support.

For more information, please contact CFS Practice Leader Alan S. Kaplinsky at 215.864.8544 or, John L. Culhane, Jr., at 215.864.8535 or, or Christopher J. Willis at 678.420.9436 or


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