The revamped financial regulator, the Financial Conduct Authority (FCA), is set to increase its annual funding requirements by 15% following the disbanding of the Financial Services Authority (FSA) on 1 April.

The annual funding requirement (AFR) for 2013/14 for the FCA is £432.1m and the combined FCA/PRA AFR for 2013/14, is £646.3m, representing a 15% increase over the 2012/13 FSA budget of £559.8m.

Medium sized firms will see a proportionate increase reflecting the type of business they conduct. This increase will be borne mainly by larger firms, reflecting the resources applied to the intensive conduct and prudential supervision of high impact firms. The FCA stresses that currently nearly half (42%) of the FCA's authorised firms only have to pay the minimum fee of £1,000.

The FCA budget will be used to fund increased supervision of financial services company and to meet its new statutory objectives, as the same time as implementing key areas of a substantial international regulatory reform agenda.

The regulator says that the main reasons for the 15% budget increase are the costs of increasing front line supervision staff, higher IT costs and an increase in central support services costs. As part of the reorganisation the PRA has moved into new premises and although the FCA has reduced its floor space accordingly, it must retain sufficient capacity to absorb the additional people required to regulate consumer credit from 1 April 2014. Total accommodation costs in 2013/14 are therefore higher under the new regime.

The FSA made a one-off contribution in 2012/13 to reduce the defined benefit pension scheme deficit that will be inherited by the FCA. This deficit is expected to increase to around £200m at the next Scheme Specific Valuation (SSV) on 31 March 2013 and an additional contribution made now will reduce the FSA legacy and mitigate the risks of significantly increased future annual contributions.Martin Wheatley, chief executive of the FCA, said: 'Much of the increase in AFR is the result of the additional resources needed to ensure the FCA delivers on its new objectives, as well as the practical costs of implementing the new regulatory structure.'

The financial penalties collected by the FSA in 2012/13 were £381.8m. From April 2013, fines will be paid directly to the Exchequer, net of certain enforcement costs (£40.6m).