Resolution is trading at 297p, down 7%, after the FCA announced it will investigate claims that insurance firms had unfair terms and charges attached to their financial products, dating as far back as the 1970 until the 2000s.
The FCA will begin its investigation in the summer which will look into the terms and conditions of over 30 million products such as pensions, endowments and life insurance.
The insurance sector as a whole has taken a hit this morning but the investigation will focus on so called zombie funds. Resolution has considerably more exposure to zombie funds and that is why the company has been hit harder today.
The stock has lost nearly nine months of gains in one trading session. If the company is liable for lawsuits it could be a colossal amount and this has traders worried. The stock traded as low as 267p today, but it has managed to pull back some of its losses with the 50-period moving average of 313p acting as a resistance level.