The Bail Bonds Industry Should Learn From The Banking Industry

Many in the bail bonds industry are happy to start a new year after a difficult 2010. The average bail bondsman faced pressure from things such as a harsh economic climate, increased regulatory scrutiny and unpopular pretrial release programs.

The issues are only compounded when the public and regulators read stories that portray bail bonds in a negative light. In 2010, there were quite a few. Last year headlines included everything from bondsmen changing bail bonds records at the courthouse to multiple instances of bail agents being arrested for improper solicitation. In one of the more shocking stories, a federal judge was removed from the bench by the U.S. Senate because he allegedly increased bail amounts to help a bail bondsman. In return the judge accepted trips, gifts and meals from the bondsman. This past year has given the industry some tough PR challenges to say the least.

Most of the public doesn't have an in depth understanding of what bail bondsmen do or how bail bonds work in the greater scheme of things. In a digital world of 30 second sound bites and access to overwhelming amounts of information 24 hours a day, their perception is shaped by the biggest headlines and splashiest news.

When news painting the industry in a negative light comes to the forefront, the entire bail bonds industry suffers. It makes potential clients more apprehensive, regulators more suspicious and pretrial release programs more attractive.

The Great Recession not only hurt the public economically, but it also damaged our collective pschye. As a nation we held certain institutions in high esteem and felt confident our interests were safeguarded. Entire industries that were once bedrocks of our economy and way of life, now fight a negative public perception of crime, corruption and morally bankrupt practices. It used to be prestigious to claim careers with nexus to banking, hedge funds or mortgages. Now those are considered four letter words. The public, which is still reeling, is calling for regulation and increased oversight. As a result, we've seen new laws enacted in record time and the creation of entirely new federal agencies.

Suspicion of business and a perception of a lax regulatory environment permeate all industries now. Unfortunately, bail bonds never carried the same prestige and reputation that other industries did. So a more suspicious public and regulatory community are more motivated now than ever before to impose additional regulations and levee sanctions or fines.

Consider this, the Dodd-Franklin bill which literally rewrote financial services regulation in our country also established a Federal Insurance Office to monitor the insurance industry. While the Office has a somewhat ambiguous mission, it is charged with recommending changes to the state system of insurance. The limit on their power is not well defined and their role is somewhat broad. That means their impact is potentially far reaching. Maybe their role will include some connection to the bail bonds industry in the future, maybe it won't.

The most important thing to remember in today's climate is that more, not less, regulation and oversight is being brought to bare. An angry populous has called for governmental intervention and unprecedented safeguards. Legislators and regulators, who want to portray themselves as quick to respond, have certainly listened. The bail bonds industry is not immune to that. In fact, Colorado fined Lexington National Insurance $332,000 for violations of insurance law related to Colorado bail bonds business. This fine represented a significant chunk of the company's Colorado revenue, as it only did $2.4 million in taxable bail premium in 2008. A fine of more than 10% of its revenue was seemingly the result of issues relating to improper documentation and compliance paperwork practices.

The bail bonds community would be well served by learning from the trials and tribulations of other industries. Compliance shortfalls, questionable solicitation practices and anything that even suggests impropriety only strengthen the arguments made by critics. Bail bondsmen serve a much needed role in our communities and legal system, but we can be our own worst enemy when we raise suspicions and doubts about our ability to operate in an orderly manner. The bail bonds industry needs stronger self governance and a commitment to the highest ethical standards. If it fails to do so, expect someone else to step in and mandate it on their terms.