Insights on expanded 'fairness', impact and justice, and human capital and DEI
Acting in concert with the Administration’s strategies and directives to promote equity, fairness, and inclusion, federal financial service regulators and state attorneys general have expanded their bank and nonbank supervisory lens on principles of fairness and customer/investor protections to encompass the “whole of the consumer,” focusing on impacts, outcomes, and DEI concerns at all touchpoints.
Explore here insights on Fairness and Inclusion from the KPMG report Ten key regulatory challenges of 2023.
Regulators have expanded their expectations of “fairness” to reach beyond fair lending laws and credit products to incorporate all consumer/investor products and services over the entire product life cycle. “Unfair” outcomes need not be intentional to result in consumer/investor harms and regulators will be focusing on companies’ efforts to ensure a “fair and balanced” approach for all customers.
Heightened regulatory attention will be directed toward:
The Administration is directing regulatory and enforcement agencies to take action on multiple fronts to promote racial, social, and economic equity; protect consumers and investors from products and practices that may cause financial harm; and prioritize vulnerable groups and communities experiencing disproportionate impacts. In financial services, these efforts will be seen in 2023 in areas such as:
Diversity Equity and Inclusion is an ESG-related focal point for the Administration, policy makers, investors, and the public-at-large, driving regulatory focus on companies’ DEI goals, performance, and program maturation. This area, however, is subject to increasing reputation, legal, and compliance risks in light of additional voluntary as well as mandatory data reporting and via recent legal cases. Regulatory attentions are likely to include:
The marked increase in supervisory focus of ‘fairness’ goes well beyond the traditional areas. We certainly expect that trend to continue.
Chief Risk Officer, PNC
☑ Embed fairness controls across all consumer/retail products and services
☑ Prioritize and embed fairness across the full customer journey
☑ Execute centralized processes; streamline and simplify all customer- focused communications
☑ Enhance complaint, claims and dispute management processes, technology, and data analytics
☑ Set clear, measurable DEI goals, develop metrics and monitoring program, and factor into management accountability
☑ Evolve the CMS (across lines) using a DEI lens, including revisiting the inputs/weightings into risk assessments and new product and service reviews/approvals -- all to consider inclusion, access, tangible benefit, and consistent/equitable outcomes.
Ten Key Regulatory Challenges of 2023
Read our report for client perspectives, regulatory recaps, and actionable steps to help mitigate risk.Download PDF