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Requests Increase From Regulatory Agencies for Diversity and Inclusion Policy

By Colleen P. Lewis

Section 342 of the Dodd-Frank Act mandated certain federal regulatory agencies establish an Office of Minority and Women Inclusion and establish standards for “… the racial, ethnic and gender diversity of the workforce and senior management of the agency.” The diversity provision also mandated the development of standards for “assessing the diversity policies and practices of entities regulated by the agency.”

The six federal agencies with regulated entities issued a joint policy statement setting forth the standards for self-assessment in June of last year. In February 2016, the Office of Management and Budget approved the collection of voluntary self-assessments from regulated entities. As a result, regulated entities recently have received requests from their appropriate agency to voluntarily submit self-assessment of their diversity policies and practices.

Caution should be exercised in making the decision on whether and how to respond to such requests.

The purpose of Section 342 of the Dodd-Frank Act is to promote diversity and inclusion within the financial services industry. The scope of the diversity provision is broad. The provision applies to the FDIC, the Securities and Exchange Commission, the Treasury Department, the regional Federal Reserve banks, the National Credit Union Administration, the Consumer Financial Protection Bureau, the Federal Reserve Board of Governors, the Federal Housing Finance Agency and the Office of the Comptroller of the Currency.

Only the six agencies with regulated entities (FDIC, OCC, SEC, NCUA, CFPB and Federal Reserve Board) issued the joint statement of policy establishing joint standards for assessing the diversity policies of their regulated entities.

Correspondence from the appropriate agency (the primary regulatory agency), such as the FDIC, is being sent to regulated entities with a copy of the joint policy statement and standards for self-assessment. Consistent with Section 342 of the act, the correspondence from the appropriate agency reminds the employer it must have a diversity and inclusion policy, but there is no mandate that the standards set forth in the joint policy statement be adopted by the employer. The letter also makes clear that submission of the self-assessment of diversity efforts is voluntary.

Most employers are correctly wary of disclosing confidential self-assessments to regulators. While the agencies offer an incentive for voluntary self-disclosure by allowing the employer to designate the information submitted as “confidential, commercial information,” it is unclear whether such designation will protect the information from unwanted disclosure in response to a Freedom of Information Act request. Careful consideration should be given as to whether to respond with any information on a voluntary basis.

It should be noted, however, that even if the employer chooses to ignore the request, the regulatory agency retains authority to “reach out to regulated entities … to discuss diversity and inclusion practices and methods of assessment.” What form such discussion will take is an unknown, but since Section 342 does not provide a mechanism for enforcement and does not set forth any penalty for failure to comply, the old adage “less is more” should be followed.

Given the mandate for the financial services industry to “promote transparency and awareness of diversity policies and practices” in conducting business, it is prudent to prepare a diversity policy which includes outreach efforts. However, such policies must be carefully drafted not to run afoul of existing law.

Additionally, employers should be very careful when reviewing company data for the purpose of self-assessment. Legal counsel should always be sought during self-assessment and before any final recommendations are made.


Colleen P. Lewis is a partner in the labor and employment group at Dinsmore & Shohl LLP in Cincinnati. To contact her, visit

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