Mr Spencer defended self-regulation at Lloyd's and said progress had been made in improving procedures. He said it would be unwise to legislate for external regulation now although it might be worth considering in a few years' time as the profile of the market changed.
Mr Spencer was answering questions from the Treasury and Civil Service select committee, which is examining financial regulation.
In response to tough questioning from MPs he maintained that it was the DTI's role to protect policyholders not capital providers such as the names, who have lost vast sums over the past decade. He said he believed the current management of the society was going down the right road in attempting to quantify the liabilities likely to emerge in future from the "long-tail" business that has caused Lloyd's biggest losses. He added that the new regulatory regime being put in place was better than had existed previously.
In response to MPs' questions about Lloyd's solvency he said that last summer Lloyd's had passed its test of having enough free assets to cover liabilities by a factor of three.