In a wide-ranging report on the market, the committee called for an external body made up of a majority of public interest members to be set up under the aegis of the Treasury.
Earlier this week, Lloyd's unveiled a complex pounds 6bn restructuring and rescue plan, aimed at ending all litigation with aggrieved names - the investors who back the market with unlimited liability. The plan would also isolate all past losses, enabling an unencumbered "new Lloyd's" to trade profitably.
"We see external regulation as an essential complement to the reforms going on at Lloyd's," said Giles Radice, Labour member for Durham North. "If Lloyd's is to survive, it has to have a form of external regulation in which investors are entitled to have confidence."
The committee expressed doubt as to whether Lloyd's is safe even now for investors. There was harsh criticism of existing regulatory arrangements, and in particular of the man in charge, Sir Alan Hardcastle. He was described as being more interested in drawing a veil over the past than in making a rigorous examination of available evidence of both negligence and fraud. In questioning by the committee, Sir Alan "too often deferred to David Rowland (Lloyd's chairman) - it became very annoying. The arm's-length relationship does not appear to be working," said Mike O'Brien, Labour for Warwickshire North.
The committee was also harshly critical of names, saying they bore some responsibility for disasters that befell some of them. Names displayed double standards, the report stated, taking no interest in the affairs of Lloyd's during the years when money kept rolling in, only asking questions when things started to go badly wrong. Names were "seduced by greed and snobbery", said Diane Abbott, Labour MP for Hackney North.
The committee insisted on urgency of reform. However, Nigel Forman, Conservative for Carshalton and Wallington, said it was "very unlikely any legislative change could be brought in during this parliament - even if we want it acted on speedily, this is unlikely."Reuse content