The FSA has launched an urgent review of the data supplied by the London market on the level of contract certainty within the industry.
In recent weeks, the FSA has begun contacting insurers, brokers and service providers to discuss "discrepancies" in the figures supplied by the market on contract certainty versus the FSA's own audited data.
A senior broking source said: "The FSA wants to review the quality of data used by the individual companies in the market on which they based their contract certainty figures. The difference between what has been supplied and the reality is startling.
"The next major milestone is September, but the market is way behind. Those who don't make the upper quartile are in for a major shock."
It is understood that Marsh has received a visit from the FSA supervisory teams in the past two weeks, while Willis will be visited next week. A number of insurers and service providers are expecting visits.
"The 33 signatories who signed up last year to the guidance principles will be visited," the source added.
Problems stem, according to market sources, from the FSA chief executive John Tiner's comments at the FSA's Insurance Sector Conference in March, where he said: "To demonstrate our good faith in the market's ability to reach its goal, we will not be pressing ahead with our work on the contingency plan of regulatory intervention. We are putting it on the back-burner, although we are not taking it off the stove altogether."
This has been interpreted by some underwriters and brokers that "contract certainty is a dead issue", said the source. A London market underwriter said: "The London market has hoodwinked the FSA on much of the data."
It is also understood that many executives are concerned that the supervisory teams are applying the contract certainty principles as rules. But an FSA spokesman denied this.
The road to contract certainty
Dec 2004 - Tiner issues ultimatum to market on contract certainty
Oct 2005 - Lloyd's issues contract certainty guidelines
Dec 2005 - 65% contract certainty on Lloyd's policies
June 2006 - 80% contract certainty achieved