Speaking at the FSA’s annual public meeting, Turner said: “The Supervisory Enhancement Program involves investment, which means higher cost, which means higher fees.
“The executive and the Board of the FSA are very focused on ensuring that, after a one off increase in costs to achieve this investment, the industry will not face relentless rises in future.
“But we cannot avoid the one off increase: in the past, in relation to our highest impact firms, we were trying to do supervision on the cheap.”
Turner also played down the importance of whether the FSA or the Bank of England should hold responsibility for the supervision of banks, saying it was not as important to the future stability of the financial system as other decisions.
He said: “And the effort which the FSA and the Bank of England will devote alongside each other over the next year or two, during which the vital international decisions are made and become fixed, will I believe be far more important to the future soundness of our financial system, than any debate about what the future division of responsibility between us should be.”
Later Turner referenced the Conservatives white paper released on Monday which suggested the FSA should be scrapped in favour of a Consumer Protection Agency.
Turner said the Tories and the Government have a similar view on the really important substantive issues such as capital and liquidity regulation.
But he said their thinking on the organisational structure of the Bank and the FSA was “very different” and said there were pros and cons to different models.
He said: “The key challenge is not to decide which model to have, but to make whatever is the chosen model work effectively.”
Chief executive Hector Sants also played down the importance of the future organisational structure of the FSA in his speech at the AGM.
He said: “In particular I hope that regardless of any changes to the high-level regulatory architecture in the UK that the culture, the people, and the operating model that we have created here at the FSA will continue to provide the effective supervision that society requires.”