More than 80,000 individual investors holding £700 million worth of policies were facing uncertainty last night after Keydata Investment Services, an independent fund manager, was forced into administration by the Financial Services Authority.

The City regulator said yesterday that Keydata was insolvent and unable to meet its liabilities and named Dan Schwarzmann and Mark Batten at PricewaterhouseCoopers (PwC) as administrators.

The FSA said that it was pushing Keydata into administration in order to protect investors but gave no further details about the apparent problems at the company.

Keydata, which has three offices in London, Reading and Glasgow, specialises in selling structured products through a network of independent financial advisers. It also provides administration services for financial institutions in the City.

The fund manager had assets of £2.8 billion as at the end of April. The administration means that no investors will be able to redeem their policies until PwC has a clearer picture of what has taken place.

“This is a complex situation and we know many investors will have serious concerns,” Mr Schwarzmann said. “We will do all we can to get a clear understanding of the position as soon as possible.”

It is not yet clear whether customers will lose money.

Financial institutions with £2.1 billion of funds under administration at Keydata will also be unable to get access to their capital.

The administrators confirmed that four of Keydata’s venture capital trusts were ring-fenced and would be unaffected.

It is understood that the administration order, executed yesterday morning, took Keydata by surprise. Sources close to the company said last night that it disagreed with the regulator’s decision and did not accept that the FSA was acting in the best interests of its customers.

“The underlying investments are performing comfortably and Keydata believed they would deliver,” one insider said. He added that the company had proposed an alternative solution to the FSA last week but had had its proposal rejected.

“There has been a Mexican stand-off taking place in this and it has resulted in the FSA declaring the company insolvent,” he said.

On its website, which was still functioning yesterday, Keydata boasts of a string of awards from trade publications.

Keydata was founded in 1997 by Stewart Ford, the managing director. It sold its first policy in 2001 and employs more than 100 staff.

PwC has set up a website, www.pwc.co.uk/KIS, and a telephone helpline, 020 7804 4424, for customers.

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax