Sants says when he was appointed he told the board that he planned to serve as CEO for three years.
The board of the FSA says it will announce the process for deciding the succession to Sants in due course.
Speaking about his three years at the FSA, Sants says: “Of course, those three years have encompassed the most extraordinary circumstances for a financial regulator, and I am very proud of the manner in which the FSA rose to the challenge of dealing with such unprecedented turbulence across global financial markets.
“Moreover, I believe the FSA candidly examined the failings in financial regulation that contributed to the onset of the crisis, learned the lessons and has gone on to reform itself into a much stronger and better equipped organisation.
“The success of any regulatory structure depends on ensuring supervision is carried out by high-quality supervisors with sufficient resources and specialist support.”
He believes the FSA has made great strides in ensuring that such individuals are in place in the UK and he says he is sure that after he leaves they will continue to do invaluable work to ensure financial stability and protect the interests of consumers.
Adair Turner, chairman of the FSA, says Hector has given outstanding service and leadership through the turbulent last three years and has played a pivotal role in reforming the FSA into a truly effective organisation.