The U.K.'s City regulator is to investigate 30 million life insurance policies worth £150 billion ($249 billion) sold over the last four decades, to see whether so-called zombie funds were being responsibly managed.
The Financial Conduct Authority (FCA) announced it would be looking into policies such as pensions, endowments, investment bonds and life insurance policies sold in the 1970s, 1980s and 1990s, although the bulk of claims are expected to be more recent.
The FCA will provide details of its plans come Monday. Clive Adamson, director of supervision at the body, said: "The work on fair treatment of long-standing customers in life insurance is a supervisory piece of work that will give us a better understanding of how this area works."
Adamson emphasized the FCA would not be looking at 30 million individual policies, but that it was concerned that a huge number of people held investments that they have forgotten about or rarely checked.
A FCA statement said: "We are concerned that life insurers are not giving these customers the same priority as new customers get, and it's possible that some may be taking advantage of customers' lack of engagement."
The FCA also raised concerns that life insurers might be making changes to policies that benefited them, but not investors; that firms were not regularly reviewing products to ensure they were fulfilling their intended purpose; and that they might be levying high exit fees. The FCA referred to a recent report by consumer lobbying group Which? that highlighted a 12 percent exit charge levied by one fund.
(Read more: Britain seen growing faster than expected in 2014)
There were concerns the probe could uncover the equivalent of one of the U.K.'s worst consumer scandals in recent years, the mis-selling of payment protection insurance (PPI).
Following the PPI investigation, the FSA estimated that around three million people would be eligible for refunds, worth a total of £4.5 billion. Lloyds Bank alone has now paid out £7 billion to customers.
(Read more: Lloyds takes further hit on mis-sold insurance)
Too early to tell
Simon Harris, managing director of the EMEA insurance team at Moody's, told CNBC it was too early to tell what the ramifications could be from the life insurance investigation. But he said the announcement made sense in terms of regulators looking to clean-up house.
"It's a continuation of regulatory investigations into life insurance in general," Harris said.
"Last week, we had Chancellor George Osborne announcing changes to the annuities market in the UK; we had yesterday Steve Webb, the pensions minister, announcing the conclusion to looking at caps on auto enrolment schemes in the U.K."
Wyn Derbyshire, head of pensions at King & Wood Mallesons SJ Berwin, said there was potential for a huge investigation regarding life insurance, with some of the issues involved "philosophical" in nature.
"A question to be answered is to what extent should the state intervene if a private citizen freely entered into a contract which results in him or her being contractually locked into a product that is being honoured by its provider but which over time has become outdated when compared to more favourable products that can be provided under current market conditions?" said Derbyshire.