Are authorised representatives brokers - and if not, what are they? Right now, as the intermediary sector adjusts yet again to a change of circumstances, the answer is that they're a bit of everything, with their status undergoing some intense examination at present.

The rise and rise of the authorised representative in the intermediary sector started after the Financial Services Reform Act (FSRA) came into force in March 2001.

The provision in the FSRA allowing brokers to change their status from "employee representative" to "authorised representative" prompted some experienced intermediaries to sell their business and stay on as advisers.

"They were still operating as a broker and representing their client but their employment relationship had changed," NIBA Professional Development Executive Linda Evans told insuranceNEWS.com.au last week.

Despite their years of experience, some former brokers have had to relinquish their Qualified Practising Insurance Broker (QPIB) accreditation in favour of the more general Qualified Financial Services Representative (QFSR).

But NIBA is now recognising the changing broking landscape as it moves towards individual membership. It's possible authorised reps will in the future be permitted by NIBA to remain QPIBs.

Other authorised reps have come about from new business models under which one broker licensee may run a number of branches. It's a logical answer to the compliance nightmares of the FSRA and also a very good way for younger professionals to get into business for themselves.

"Many years ago, it was fairly easy to set up as a broker," Ms Evans said. "But with the FSRA it's very hard for a young person because they wouldn't have the experience ASIC requires."

Some older brokers have expressed concern about the trend towards younger intermediaries entering the industry as authorised reps. There is a widespread feeling that "broker-lite" authorised reps represent the thin end of the wedge - that they haven't done the hard yards of compliance.

Keith Roderick, Principal of a regional Victorian brokerage, says authorised reps "can play the game and reap all the benefits without the costs".

NIBA's Linda Evans recognises the concern, and agrees some NIBA members are asking "whether this will take people down a road that is not true broking".

And there are fears authorised reps could be confused with agents. "Brokers have always differentiated themselves from agents," she said.

But supporters of the authorised rep concept point out that many brokers have been happy to operate under restrictive binder arrangements for certain classes of business for years with clients receiving full disclosure.

Jacob Ross exemplifies the new breed of authorised reps, with his Sydney company Affinity Insurance Services operating under the auspices of Perth-based NAS, which was formed pre-FSRA by four multi-agents. Today NAS employs both authorised reps and brokers.

Mr Ross says he concentrates on "core broking activities" without having to worry about compliance costs and back office headaches. And he says authorised reps are just as good as their broking counterparts.

"I guess it depends on the level of training that the authorised reps are receiving," he told insuranceNEWS.com.au. "The issue comes down to the level of skill, quality and training."

Many traditionalists believe the authorised rep of today will be the smaller broker of tomorrow. But is there a real incentive for them to obtain their own licence?

"It will be interesting to see how the trend develops," Ms Evans said. "Broker licensees may want to increase the number of authorised reps or they may go the other way. Or other models - such as partnerships - might start up."

One thing is for sure - authorised reps are here to stay, but their status within the industry still isn't a foregone conclusion.