Shares in Resolution and peers tumbled today following reports the Financial Conduct Authority (FCA) is to probe 30 million legacy insurance policies.
In an interview with the Daily Telegraph, the FCA said it has concerns that pensions, endowments, investment bonds and life insurance policies sold in the UK between the 1970s and 2000 subjected customers to "unfair" conditions.
In particular, the FCA is preparing to act on exit fees from such policies, which currently penalise savers who want to switch providers.
Today's revelation - which is expected to be unveiled by the FCA in an update from the regulator on Monday - spooked markets.
Shares in Resolution were down 9.2% by mid-morning, while insurers Legal & General and Aviva were both off 4.9% and 4.8%.
St James's Place shares also fell 3% on the news.
According to the Daily Telegraph, the FCA said it might "intervene on exit charges".
A move to tackle zombie funds could shake up the insurance and savings markets in a huge way and free up money to be invested in new products.
Many savers with legacy deals are effectively stuck in some products because of the huge exit penalties - some charge as much as 50% of a person's investment to leave.
Smoking biggest culprit; obesity second
Average earner will gain £840 in 2018
Will also move heritage items
Responding to letter from Treasury Committee chair Nicky Morgan