Senior market figures are preparing to break away from Lloyd's and London market reform groups on contract certainty, according to market sources.
The source said a breakaway group had been formed because some individuals "did not think that the Market Reform Group (MRG) had done enough" to meet the FSA's deadline.
Firms will begin to move away from the MRG's plans and do something "collectively" if they did not feel the MRG's efforts were moving quickly enough, the source said.
The source described the firms involved as "senior people. Even the LMA does not know about this."
The revelation came as the MRG laid out its blueprint for ensuring that all firms trading in the London market meet the FSA's deadline of 31 December 2006 for achieving contract certainty.
Iain Saville, an MRG member, responded: "Insurers here are free to make their own arrangements to achieve contract certainty.
"But there is a strong view that the best chance of meeting the FSA's challenge is to have a common approach."
Contract certainty roll-ou
The MRG will roll out a blueprint to achieve contract certainty in four phases, with the ultimate target of 85% of all contracts meeting the criteria by 1 January 2007.The MRG, which is made up of the IUA, the LMBC, the LMA and industry representatives, will assess the 'certainty' of all contracts using 50 criteria. These are contained within nine broader headings including policy wording, risk disclosures and law, jurisdiction and arbitration terms. The body hopes to encourage compliance by regularly producing contract certainty 'league tables' of the 250 plus brokers, underwriters and service providers within the London market.
Simon Sperryn, LMA chief executive, said: "The move to contract certainty has been driven by companies themselves. We don't expect to have to impose any sanctions because it makes sense for everyone commercially."