CU Trades Urge Caution in NCUA Proposal to Reward Diversity Survey Participation

The NCUA should encourage credit unions to complete their annual diversity study but should keep participation voluntary and approach any financial rewards for completing it with some caution, credit union trade groups said.

“While credit unions’ diversity and inclusion are of critical importance, the reality is that staff and other resource constraints make it difficult for smaller credit unions to complete tasks outside of those necessary to maintain operations,” Luke Martone, CUNA’s senior director of advocacy and counsel, told the NCUA in a letter commenting on credit union fees.

A monetary reward might not provide a clear picture of diversity in the credit union industry, Andrew Morris, NAFCU’s senior counsel for research and policy warned the agency.

“Providing monetary incentives, while well-intentioned, could potentially distort results by favoring responses from credit unions with greater staff capacity to answer a detailed survey, rather than truly measuring the extent of diversity within the industry,” he said.

The NCUA provides credit unions with an annual, voluntary self-assessment. However, few credit unions have participated, according to agency reports. In the most recent survey, only 118 of the nation’s 5,326 credit unions submitted the survey to the agency, Monica Davy, the agency’s director of the Office of Minority and Women Inclusion, told a House subcommittee in September. In 2016, the first year the survey was circulated, only 35 credit unions responded.

Davy said the agency was seeking ways to increase participation.

To that end, the NCUA has sought comments on whether credit unions should receive a “modest discount” on the federal credit union operating fee due in the subsequent year. The question was presented by the agency as part of its publication of its proposed updated fee structure.

The agency acknowledged that since federally-insured, state-chartered credit unions pay an operating fee to their state agency rather than the NCUA, the agency would have to provide a different incentive to encourage their participation.

The Cooperative Credit Union Association supports establishing incentives that would be available to both federal and state-chartered institutions, the trade group’s president/CEO, Ronald McLean, told the agency. He suggested that the agency highlight credit union diversity efforts as a positive example for the entire financial services industry.

The financial incentive could encourage more credit unions to participate in the survey, Brad Douglas, president/CEO of the Heartland Credit Union Association, said. However, he noted that the NCUA uses the same assessment that the nation’s largest banks use, adding that the agency should consider adopting a streamlined version that is more appropriate for credit unions.

Martone emphasized the need to ensure that a corresponding discount be offered to FISCUs. “We leave it to the agency to determine the logistics of such a discount but working directly with the state supervisory authorities would seem to be a logical approach,” he wrote.