Outgoing FSA chief executive Hector Sants today said society "must accept" a larger and more expensive regulator if it wants more done to lower market risks.
In its 2010/11 Business Plan, announced today, the FSA confirms it is upping its annual funding requirement by 9.9% to £454.7m.
It also confirms it will be recruiting an additional 460 staff in 2010 to implement Solvency II and to deliver the "intensive" supervisory approach needed for the very largest firms. This will lead, it says, to a 16% jump in staff costs, to £346.9m.
The regulator last year hired 280 extra staff as part of its Supervisory Enhancement Programme, which it expects will have an annual running cost of £40m.
Sants says: "If society wants a more proactive approach it must accept that it will have a larger and more expensive regulator. Intensive supervision is inherently more confrontational."
The FSA's budget for the coming financial year is £458m - excluding financial capability - which is 16.5% higher than 2009/10. Including financial capability takes the total budget to £490.9m.
It will have to make do without chief executive Hector Sants for most of the financial year as he steps down, as planned, in the summer after three years at the helm.
Last month, the FSA announced a restructure to its fees and levy calculations for 2010/2011, which will now be on the size of the regulated business. There will be a minimum fee to cover the general cost of regulation and then additional fees will be based on the firm's income, rather than the number of approved persons.
Mortgage and insurance brokers will have to fork out higher fees while independent financial advisers will pay less.
For mortgage brokers, minimum fees are set to increase 34% from £745 to £1,000. General insurance brokers are seeing a 122% increase, although this is from a lower base. Until now, they have only paid £450.
IFAs, however, will enjoy a 46% fall to £1,000. In the past, they paid £1,850 minimum fees plus 50% if they had different permissions.
All firms pay a flat fee of £1,000 and after that a sliding scale operates - a process it calls "straight-line" recovery [of fees].
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