On 15 May 2024, the CSSF published the outcome of its review of the diversity policies of a sample of banks, identifying various shortcomings and requiring credit institutions to make a range of improvements.
Background
In 2023, the CSSF conducted a study of the compliance of credit institutions with the requirement to implement policies that promote diversity within the management body, using a diversity questionnaire sent out in April 2023 to collect relevant data from 46 credit institutions.
On 23 October 2023, the CSSF published a press release summarising the findings of its review of the completed diversity questionnaires.
The findings revealed shortcomings in the understanding and implementation of the regulations on diversity and so the CSSF ordered 16 credit institutions to submit their diversity policies in order to carry out an initial series of checks.
The outcome of the review of these policies was published in a press release dated 15 May 2024.
Key Findings
The CSSF confirms the existence of significant issues in the application of the legal and regulatory requirements on diversity in the management body.
The main shortcomings identified by the CSSF are:
- Lack of knowledge or understanding of the applicable legal and regulatory requirements relating to diversity.
- The CSSF requires credit institutions to be aware of the applicable legal and regulatory provisions and to apply them in their diversity policies, and warns that it intends to verify the correct application of the relevant legal provisions during forthcoming inspections.
- Lack of effective and concrete objectives in line with these
diversity requirements.
In this respect, the CSSF provides a list of examples of qualitative objectives that could be described as “good practices”, which include the following:- drawing up an annual diversity report;
- a commitment to take diversity into account when appointing a member of the management body;
- a regular assessment of the diversity policy and its impact on the composition of the management body;
- implementing effective career planning measures for staff eligible for future management positions.
- a regular assessment of the diversity policy and its impact on the composition of the management body;
- implementing effective career planning measures for staff eligible for future management positions.
Credit institutions are encouraged to include all types of relevant qualitative targets in their diversity policies. The CSSF further specifies that the absence of such objectives will render their diversity policy non-compliant with legal and regulatory requirements, which will be noted by the CSSF in the event of an on-site inspection.
- Lack of strong and detailed measures on the basis of which a
real impact on diversity within the management body could be
observed in the short or medium term.
The CSSF emphasises that diversity obligations are twofold because some rules apply to all staff (with the objective of creating a sufficiently diverse pool of candidates for management positions), whereas other rules apply only to the management body, and that compliance with all these rules is essential. Any diversity policies that do not comply with all the relevant rules should accordingly be amended. - Lack of measures aimed at career planning for equal treatment
and opportunities for members of staff.
The credit institutions concerned are urged to remedy this situation, as any failure to implement appropriate provisions will lead to an insufficiently diverse pool of candidates for management positions.
The CSSF further indicates that diversity remains a growing concern for the CSSF and that it intends to continue its checks in this area, notably through the review of existing diversity policies. Credit institutions are therefore required to bring their diversity policies in line with the applicable regulations.
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