February 23, 2015 | Filed under: Featured,Weekly Newsline |
You may have heard rumblings about Office of Minority and Women Inclusion (OMWI) compliance. In fact,Mortgage Compliance Magazine dedicated its entireFebruary 2015 issue to it. Do you know how it might affect your company? Have you taken any steps to create a program for compliance?
OMWI compliance has the potential to “sneak up” on the industry, and, in this edition of NewsLINEs, we want to redirect your attention to some “don’t miss” information from the magazine.
What is OMWI?
Section 342 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank or Act) mandated the creation of the Office of Minority and Women Inclusion (OMWI) in all agencies covered by the Act and further mandated that each OMWI will be responsible for all agency matters relating to diversity in management, employment, and business activities. Eight financial agencies and twelve Federal Reserve Banks (collectively, “Agencies”) have created Offices of Minority and Women Inclusion in compliance with the OMWI, including:
- Department of the Treasury;
- Federal Deposit Insurance Corporation;
- Federal Housing Finance Agency
- Each of the Federal Reserve Banks;
- Federal Reserve Board;
- National Credit Union Administration;
- Office of the Comptroller of the Currency;
- Securities and Exchange Commission; and
- Consumer Financial Protection Bureau.
Further, Dodd-Frank directed the agencies to develop standards for assessing diversity policies and practices of the entities regulated by those agencies – that means, YOUR company. (For more detailed background, see MCMag February 2015, page 16.)
What will OMWI require?
On October 25, 2013, six federal agencies proposed an “Interagency Policy Statement Establishing Joint Standards for Assessing the Diversity Policies and Practices.” (February 2015 MCMag, page 32.) The joint standards remain in proposed form today, while the agencies review public comments on the proposal. The agencies accepted public comments through February 7, 2014, and have indicated that final standards are expected during the first quarter of 2015. The proposed standards address four focus areas:
(1) Organizational commitment to diversity and inclusion,
(2) Workforce profile and employment practices,
(3) Procurement and business practices and supplier diversity, and
(4) Practices to promote transparency of organizational diversity and inclusion.
What do you need to do?
- Define Diversity and Inclusion for Your Organization – The overarching theme in each of the four focus areas is that the entity be committed to both diversity and inclusion. Start by establishing an organization-wide definition.
- Conduct a Self-Assessment to Identify Existing Practices and Opportunities for Growth – To develop a compliant Section 342 program, entities should assess what D&I measures already are in place and can be continued or built upon going forward. A self-assessment provides organizations with an opportunity to use the D&I work they already are doing to comply with Section 342. Self-assessments are critical in forming a roadmap for achieving Section 342 compliance and should include a review of practices in each of the four focus areas. In conducting this self-assessment, entities should consider all relevant factors that affect their diversity and inclusion (D&I) program, including but not limited to their size, total assets, number of employees, governance structure, revenue, number of members and/or customers, contract volume, geographic location, and community characteristics.
- Tailor Your D&I Program to Fit the Needs of Your Organization – The standards recognize that no two entities are the same and that Section 342 programs are not “one size fits all.” Rather, the standards offer a wide degree of flexibility when it comes to compliance, allowing each entity to tailor its approach to compliance to fit the entity.
- Demonstrate the Organization’s Commitment to Diversity and Inclusion – Several factors are recommended to demonstrate an organization’s commitment to diversity and inclusion, including a strategic plan with attainable goals; senior-level management involvement and oversight; and integration into the company’s culture and core values.
- Emphasize the Importance of Tracking Diversity and Inclusion-Related Initiatives – Like any successful initiative, measurement of progress is a key. Metrics are an invaluable tool to measure employment and procurement D&I growth or decline. They may be used to validate the company’s efforts should it later come under scrutiny and as a means of identifying areas on which the entity should focus its efforts.
- Make D&I Part of the Organization’s Workforce Profile and Employment Practices – A compliant Section 342 program includes proactive employment practices focused on raising the company’s D&I profile.
- Establish a Supplier Diversity Program with Procurement Goals – To the extent practicable, entities should develop a supplier diversity policy to ensure that its goal of engaging diverse-owned businesses is achieved, including minority-owned business enterprises and women-owned business enterprises.
- Celebrate Organizational D&I Initiatives through Promotion and Transparency – Companies should publicize their commitment to D&I. Examples include actively updating websites with press releases, detailing the progress and successes in D&I. When highlighting accomplishments, companies should be specific, noting which relate directly to short- and long-term goals. Further, D&I objectives and accomplishments should be included in annual shareholder reports.
- Make Community Engagement Part of Your D&I Initiatives – Companies should also consider their community investment initiatives that affect organizations with diverse leadership and/or serve diverse beneficiaries in evaluating their current D&I initiatives and creating a compliant Section 342 program moving forward.
- Start Now, But Take a Long-Term Approach – While the agencies’ review of public comments continued last year, Stuart Ishimaru, Director of the CFPB’s Office of Minority and Women Inclusion, cautioned that although final standards have not yet been issued, regulated entities should “start now” to lay the groundwork for compliance. Based on this statement, and the length of time it takes to develop an effective Section 342 program, regulated companies would be best served by heeding this advice and beginning now to take compliance measures.
OMWI compliance would not be the first regulatory change to take financial institutions ‘by surprise.’ Take steps now to be sure your company is not one of them.