Keydata Investment Services, the insolvent investment firm, mis-sold tax-efficient savings products to thousands of individual investors, it emerged last night, as buyers queued to acquire the troubled company.

Dan Schwarzmann, one of two partners at PricewaterhouseCoopers (PwC) brought in as administrators to Keydata on Monday, said that the company had sold investors secure income bonds and defined income plans that did not meet regulations covering individual savings accounts.

He said that, despite the problem, he had established that Keydata’s retail funds were held in secure accounts and about 80,000 investors should be able to access their money.

The Financial Services Authority, the City regulator, declared Keydata insolvent on Monday, having contacted PwC on Sunday night. At the time of the insolvency Keydata had £2.8 billion of assets, about £700 million of which were investments taken out by individual savers.

Keydata is thought to have incurred an unpaid tax liability to HM Revenue & Customs of about £5 million as a result of selling the products, on which tax is now due. It is one of the reasons that the FSA declared Keydata insolvent, Mr Schwarzmann said.

He said that he had discovered no other problems and that PwC had received “tens and tens and tens” of expressions of interest by potential buyers, adding: “I want to sell the business as quickly as possible. I would hope to be in discussions with a single preferred party next week.”

Jubilee Financial Products, a specialist investment boutique set up by former derivatives traders at Credit Suisse, emerged yesterday as a potential buyer for the entire Keydata operations, including the 100 staff.

Adam Habib, Jubilee’s chief executive, told The Times that the company had financing in place from a group of private investors to buy Keydata: “It is a business that we have been keeping track of since it started. We would be very interested to look at the whole lot.” He said it was essential that PwC moved swiftly to sell Keydata before customers cancelled contracts.

Mr Schwarzmann said that he had so far discovered about 20 financial institutions that had lodged their funds with Keydata and had contracts for the company to administer the assets, including doing all the paperwork for customers.

Mr Habib declined to put a potential value on Keydata, but said that it was perfectly capable of generating substantial future revenues.

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