In its 2010/11 Business Plan, the regulator said staff costs will total £346.9m in the 12 months ending March 2011, which is 16% – or £47.7m – more than 2009/10.
The regulator will hire 460 staff in 2010 to implement Solvency II and to deliver the supervision required for the very largest firms.
This is in addition to the 280 extra staff hired last year as part of its Supervisory Enhancement Programme, which it anticipates will have an annual running cost of £40m.
Hector Sants, chief executive of the FSA, said society must accept a larger and more expensive regulator if it wants more done to lower market risks.
Sants said: “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.”
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.
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.
The FSA said the increase in costs is a key part in delivering of a transparent regulatory regime under the Mortgage Market Review.
The regulator is still consulting on its Mortgage Market Review which will makes changes to the market including that firms ensure consumers clearly understand the costs and risks of mortgage borrowing and ban self certified mortgages.
The FSA is also continuing to look at the applicability of the Retail Distribution Review (RDR) proposals to the mortgage industry.
