The regulator makes its AFR through adviser fees, which will increase at a level above the rate of inflation this year.
This follows a 10 per cent rise in fees last year to pay for the Treating Customers Fairly initiative and a new IT system for the regulator.
Last month, FSA head of investment in the small firms division Jonathan Fischel announced that fees for small firms would rise by 10 to 15 per cent to cover the cost of the TCF initiative.
FSA chief executive Hector Sants says the increased AFR is required for its small firms enhanced supervision strategy, the move to principles-based regulation and its increased investment in IT.
He says: “I recognise this is an above-inflation increase but believe that, given the increased risk with which the FSA now has to deal, it will be supported by our fee payers.”
The total expenditure requirement has also risen 7.1 per cent from £301.7m in 2007 to £323m this year.
The regulator has increased its staff spending by 7.3 per cent to £230.3m from £214.7m, which it says includes travel, training, recruitment and pension scheme deficit reduction contributions.
The budget states: “We will increase our payroll expenditure by 4.5 per cent for the coming year, which reflects the importance of attracting, developing ad retaining talented people to operate in a more principles-based regulatory environment.
“This is slightly higher than the recent annual Retail Price Index inflation of 4.2 per cent and significantly ahead of the Consumer Price Index inflation of 2.1 per cent in October 2007.”
The FSA’s bonus funding has also risen from an average of 12 per cent to 15 per cent this year.