By the end of the year, the Financial Services Authority (FSA) hopes to boost its workforce by 460.
The regulator is upping its number of staff by 14 per cent to strengthen its enforcement arm and implement new European insurance rules.
In an attempt to become more confrontational with the industry, the FSA has increased its annual fees by 9.9 per cent to increase its staff numbers.
FSA chief executive Hector Sants said: "This proactive approach to supervision requires significantly more people than the old reactive model and those individuals must be of a higher quality and supported by more sophisticated systems."
The FSA will recruit 100 people in enforcement, 100 to deal with new European Union insurance rules and a further 260 supervisory workers.
Baigrie Davies director Amanda Davidson and professor of management at Cambridge University Dame Sandra Dawson were recently recruited to the FSA's board as non-executive directors.
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