Independent and peer-reviewed research carried out by PricewaterhouseCoopers which was published by the regulator yesterday supported a reduction in the current 7% intermediate project rate. It also backed an adjustment for tax-disadvantaged products.

The rates for use when issuing projections of prospective future investment returns for products outside the scope of the Markets in Financial Instruments Directive were last reviewed in 2007, when PwC concluded the existing rates remained valid.

They are based on an asset mix of 67% equities and 33% bond investments. Firms have to revise the rates downwards when the asset mix of a product makes in unlikely to achieve returns in line with these rates.

As well as considering whether to reduce its projection rate, the FSA will now look at whether the range of rates should be amended.

Peter Smith, head of investments policy at the FSA, said: ‘It is crucial that projection rates are set at a realistic level so that investors are not misled. Today's independent research indicates that our maximum projection rates should be reduced.

‘We are seeking views on the range of rates so investors receive a reasonable indication of what they can expect from their investment.’

The FSA's consultation paper on projection rates will also contain its response to the recent European Court of Justice ruling requiring firms to use the same mortality rates for men and women.

According to the FSA, this ruling impacts upon its Conduct of Business Sourcebook so this document will be amended accordingly.