Phones 4U falls into administration: Full Q&A on your rights

Update: 5.15pm, 1 October 2014: This is a working document, some information still isn't available, but we will add this in as soon as we get it. Please also suggest any additional points you need answers on in the forum link at the end of this article or using the Twitter hashtag #MSEphones4u.

Phones 4U has gone into administration. This is a Q&A for its 5,600 staff, as well as for its thousands of customers who want to know their rights.

In the Q&A below, wherever we refer to Phones 4U, the same questions and answers also apply to those who bought mobile phone contracts from Dial-a-Phone, which is owned by Phones 4U.

Q. Is Phones 4U still trading?

A. Phones 4U had 560 standalone stores and 159 concessions in Dixons Carphone outlets, employing 5,596 people in total when it went into administration.

On 22 September Phones 4U's administrator, PriceWaterhouseCoopers (PWC), confirmed that 362 stores would permanently close. The remaining standalone stores will be rebranded as either Vodafone or EE shops. Vodafone has bought 140 stores and EE has bought 58 stores.

On 30 September PWC said 12 former Phones 4U concessions opened as Carphone Warehouse concessions on that date. It's hoped a further 147 concessions will be rebranded as Carphone Warehouse by Christmas.

Section 1: Info for mobile contract customers including cashback/freebies, repairs and returns

Q. I have a phone I bought from Phones 4U. Will it still work and will I get mobile service?

A. It's important to understand that barring Life Mobile customers (see below for more on this), Phones 4U was a middleman selling contracts from the major networks, and it is those networks that actually provide the mobile service.

This means the phone should work and customers will continue to pay the price stated on the contract.

When we asked Phones 4U on 15 September, it said all mobile contracts bought through Phones 4U "remain unaffected" and the networks will continue to provide mobile services to these customers as per their contract.

It added that the Phones 4U customer service team also remains operational and available on 0844 8712253.

The major mobile networks all confirmed services will continue as normal when we asked. Here's what they said:

• EE's contract with Phone 4U expires on 30 September 2015, at which point it won't be renewed. However EE customers who bought their contract from Phones 4U will continue to get their service as normal and agreed prices won't change.

• O2 ended its contract with Phones 4U in February 2014. It has confirmed O2 customers who bought their contract from Phones 4U will continue to get their service as normal and agreed prices won't change.

• Three ended its contract with Phone 4U about two years ago. It has confirmed Three customers who bought their contract from Phones 4U will continue to get their service and agreed prices won't change.

• Virgin was still in contract with Phones 4U when it went into administration. It sold Sim cards, broadband and TV deals via Phones 4U but notpay monthly mobile contracts. Virgin says customers' services will continue as usual and agreed prices won't be affected.

• Vodafone isn't renewing its contract with Phone 4U when it expires next year. However Vodafone customers who bought their contract from Phones 4U will continue to get their service as normal and agreed prices won't change.

Q. I have a phone I bought from Life Mobile. Will it still work and will I get mobile service?

A. Life Mobile is Phones 4U's network, which piggybacks on EE's existing network infrastructure and radio spectrum.

Life Mobile customers' contracts are with Phones 4U. It said on 15 September these contracts "remain unaffected". The Life mobile customer services number is still running on 0844 3221133.

EE says it is "working to ensure Life Mobile is able to continue to provide service". However there is an obvious concern about how long this service will continue.

MoneySavingExpert.com creator Martin Lewis says: "The hope for Life Mobile customers is that this element of the business will be seen as a going concern and will be protected by the administrators and sold on to another company.

"It is difficult to get an exact answer on what is going to happen, but in the short term the answer is no change, your service will continue as usual."

PWC said on 16 September that there has been interest from buyers in Life Mobile, but it's difficult to see how to sell it without discussions with EE.

Q. Will cashback/freebies offered with deals but yet to be received be honoured?

A. PWC hadn't addressed this question until 26 September. On this date it said customers who purchased a phone from Phones 4U as part of a deal that included cashback/a free gift, will "unfortunately" not receive their cashback/free gift.

It adds: "We do not have any Samsung tablets, watches or other such gifts in stock."

Section 75 of the Consumer Credit Act makes credit companies equally liable for any breach of contract by the retailer but only if the amount was £100 or more.

In the case of mobile contracts each payment is considered a separate amount, which means if in the very unlikely event your monthly agreement is £100 or more a month, or you paid £100 or more upfront for the handset, you can try and claim for your cashback/gift.

If you paid by credit card for goods under £100, or on a debit card, you may be able to claim via the Visa, Mastercard or American Express chargeback schemes. However, these are customer service promises, not legal rights.

The only other way to get try and get this money back is to submit a creditor's claim to PWC, which means you're one of a long list of people owed money by the firm and there's no guarantee you'll get what you're owed.

PWC says if you're still within the 14 day cancellation period, which starts when you receive the handset, and wish to cancel the contract, your rights are "unaffected". It adds that customers should contact Phones 4U customer services on 0844 8712253 for further information.

We're awaiting confirmation from PWC on what exactly it means by "unaffected" but this could mean you can return the handset and get a full refund.

However PWC has confirmed that the cashback contract was agreed with Phones 4U, while the mobile service contract is with the network provider. So if you're outside of the 14 day cancellation period you can't get out of your contract with your network as a result of not receiving cashback/free gift, as these were two separate contracts.

Q. Will phones sent for repair be returned?

PWC said on 25 September that it's "in the process" of identifying where in the repair process phones that were posted to Phones 4U or given to it in store for repair are.

It says if your phone was with the firm for repair when it went into administration, please contact Phones 4U customer services on 0844 8712253 to provide further details. PWC adds: "If we can, we will endeavour to get the phone returned to you as soon as possible."

It adds that if you are a Phones 4U Care insurance customer that you should contact it on 0333 222 6730.

Q. What if I need to return goods because I've changed my mind?

A. As a general rule, you don't have a right to change your mind about goods you've bought, although some companies may offer a refund or exchange under their own terms and conditions.

PWC says if you're still within the 14 day cancellation period, which starts when you receive the handset, and wish to cancel the contract, your rights are "unaffected". It adds that customers should contact Phones 4U customer services on 0844 8712253 for further information.

We're awaiting confirmation from PWC on what exactly it means by "unaffected" but this could mean you can return the handset and get a full refund.

For anyone outside of the 14 day cancellation period, PWC says the contract is with the service provider eg, EE or O2, so you need to ask it about cancelling your contract.

If you've tried to return goods, please let us know how you got on via the forum discussion below.

Q. What if I need to return faulty goods?

A. When goods are faulty, your rights are with the company you bought them from. But when a company goes into administration, it means you may not be able to get your item fixed.

Instead, it's likely you'll become a creditor of the company and will be owed the cost of having your item repaired. See our Administration Help guide for more on what being a creditor means.

Phones 4U insurance customers can still claim on their insurance if it covers faulty items, see the 'Will mobile insurance policies be honoured?' section below for more on this. If you have mobile insurance from another provider, you can also continue to claim on this if it covers breakdown.

For those who don't have insurance cover for faulty items, Phones 4U initially said customers with faulty goods should call its customer services team on 0844 8712253. However on 26 September it said it is unable to provide a repair service to Phones 4U customers or pay for any repairs.

In the first instance PWC says you should go to the Phones 4U Technical Support Portal. If a repair is required and your phone is still within the manufacturer warranty period, PWC says you should contact your manufacturer. It supplies a list of manufacturers' contact details on the former Phones 4U website.

PWC adds that if you are happy to pay for the repair yourself, you can contact Technical Support on 0844 871 22 33, which will assess the costs and "direct you appropriately". If you want to register a claim for the costs of repair, you'll have to do so as an unsecured creditor meaning you're one in a long line of customers who want their money back and there's no guarantee you'll get anything.

Another option if your handset is broken is to try your network provider. Here's what the major providers told us when Phones 4U first went into administration:

• EE says customers with faulty devices should contact their device manufacturer first. If that doesn't work, they should contact EE, which will work with Phones 4U's device repair supplier to arrange for a fix.

• O2 says if customers can't get through to Phones 4U, they can contact O2's customer services.

• Three says customers should contact Three in the first instance if there's a problem with their mobile.

• Virgin says customers can contact it on the following numbers; broadband or TV: 0845 454 1111, mobile: 0845 600 0789, or 789 via a Virgin Mobile handset.

• Vodafone says customers who have an issue with their handset need to speak to Phones 4U.

Q. What if I want to upgrade my handset?

Martin says: "It's very likely that as Phones 4U is in administration, it won't honour any early upgrade promises. However if your phone was due to be upgraded, there's no harm asking your provider if it can give you the same or even a better deal."

PWC confirmed on 29 September that if any customers wish to upgrade, they will need to contact their network provider for further information. See our Haggling guide for tips on how to cut costs.

Section 2: Orders

Q. Will orders yet to be delivered be honoured?

A. When Phones 4U first went into administration it said any orders that had not already been dispatched would be cancelled and any payments refunded to customers.

Martin said at the time: "Compared to other administrations where undelivered orders were not refunded and where customers just became a creditor of the company, this is a decent result."

However on 26 September, PWC said customers who ordered and paid for an iPhone 6 will not get the handset as it doesn't have any in stock, and that these customers will not be refunded.

PWC said on 29 September that it's "not aware of any phones (other than iPhone 6's) where phones ordered were not received by customers". It says if you ordered a phone but haven't received it, you should contact Phones 4U Customer Service on 0844 8712253.

Q. Can I get my money back if orders aren't being honoured?

A. If deliveries never come, you should be covered under Section 75 of the Consumer Credit Act, if you paid by credit card and the item cost more than £100.

If you paid by credit card for goods under £100, or on a debit card, you may be able to claim via the Visa, Mastercard or American Express chargeback schemes. However, these are customer service promises, not legal rights.

If neither of these avenues work, you'll have to claim as an unsecured creditor, which means you become one in a long line of people owed money with no guarantee that you'll get it back. See PWC's website for how to claim.

Mobile seller Carphone Warehouse has also said it will reimburse Phones 4U customers for any money paid upfront if they buy a new iPhone 6 or 6 Plus from it. It says all customers have to do is go into its stores with printed evidence of their pre-order.

The offer is on until 31 October or until 20,000 people have taken it up., However Carphone Warehouse may not have the best or cheapest deal to suit your needs. Use our Cheap iPhones tool to compare tariffs across the market.

Q. Will monthly payments be taken from me if my order's been cancelled?

A. PWC said on 29 September that Phones 4U cancelled any pre-orders received for iPhone 6's, therefore the monthly service contract with the network provider was also cancelled.

It adds that it's "not aware of any phones (other than iPhone 6's) where phones ordered were not received by customers".

Section 3: Phones 4U insurance customers

Q. Will mobile insurance policies be honoured?

A. Phones 4U's insurance policies – Phones 4U Care and Premierplan – are insured by London General, which is part of the Warranty Group and a completely separate company to Phones 4U.

The Financial Conduct Authority (FCA), London General and PWC have all confirmed that Phones 4U's insurance policies remain in force.

London General says: "We would like to reassure all policyholders with an active Phones 4U Care or Premierplan mobile phone insurance policy that your policy remains in force in accordance with its terms and conditions.

"Unfortunately due to the closure of Phone 4U shops, there will be some short term disruption to the normal customer service and claim processes while we work with the appointed administrators, PWC, and our scheme administration partners to put in place effective alternatives.

"We apologise for any inconvenience that this will cause and we confirm that we are endeavouring to reinstate our normal level of services as soon as possible.

"Further information about claims already in progress or how to make a new claim will be provided on our website and that of Phones 4U's website as soon as it is available."

PWC, which was appointed administrator for Phones 4U's insurance business on 16 September, says Phones 4U has 800,000 mobile insurance customers.

It adds that while insurance customers can no longer go to stores for queries, Phones 4U Care customers can still call 0333 222 6730 for further information, while Premierplan customers can call 0333 220 5466.

MoneySavingExpert.com insurance expert Leigh Jackson says: "In my experience, when a company goes into administration and offers insurance via a third party, customers who have insurance remain largely unaffected.

"Phones 4U's mobile phone cover was provided by London General, which is part of the Warranty Group, and as such, policies remain in force.

"If policies don't continue as normal, under the Financial Services Compensation Scheme (FSCS) rules, an effort will be made to find you a new provider. If a new provider can't be found, you'll be refunded 90% of the premium paid."

Section 4: Staff and company

Q. What happens to staff?

A. Phones 4U employed 5,596 people. PWC said on 16 September that it's spoken to all employees and that pay has been agreed on an ongoing basis while staff are still employed. Here's what's happened since then:

• PWC said on 17 September that all staff who work in Phones 4U concessions in Dixons Carphone outlets will be offered roles. It adds that this "secures continued employment for more than 800 people". The agreement relates solely to staff; it doesn't include the sale of any stock or the Phones 4U brand name.

• On 19 September Vodafone announced it will buy 140 Phones 4U stores and rebrand them as Vodafone stores. This move will save 887 jobs.

• At the same time, on 19 September PWC also announced that 400 staff would be kept on to help with the administration process, however there will be 628 redundancies made. If you're worried and want to know your rights, we've help in our Redundancy guide.

• On 22 September EE said it has agreed with PWC to buy 58 Phones 4U stores, safeguarding 359 jobs. It said stores and employees will be transferred to EE with immediate effect and stores will be rebranded to EE with the majority open in the next week.

• On 22 September PWC confirmed 362 stores will permanently close and 1,697 staff are to be made redundant, bringing the total redundancy figure to 2,325. A further 720 staff will be kept on in the short term to help out with the closure programme.

Q. What's actually happened to Phones4U?

A. Phones 4U, which is owned by private equity firm BC Partners, effectively has no major mobile network on its books, meaning it does not have enough products to sell to be able to trade. This follows a decision by EE not to renew its current contract, which Phones 4U says was a "complete shock".

The firm appointed PWC as its administrator on 15 September. Since then, 198 stores in total have been bought – Vodafone bought 140 Phones 4U stores to rebrand them as Vodafone, while EE bought 58 Phones 4U stores to rebrand them as EE.

The remaining 362 stores will be closed. Dixons Carphone offered roles to staff at the 159 concessions, which will all be rebranded as Carphone Warehouse concessions.

Phones 4U's chief executive David Kassler said on 14 September: "Today is a very sad day for our customers and our staff.

"If the mobile network operators decline to supply us, we do not have a business. A good company making profits of over £100 million, employing thousands of decent people has been forced into administration.

"The great service we have provided should have guaranteed a strong future, but unfortunately our network partners have decided otherwise. The ultimate result will be less competition, less choice and higher prices for mobile customers in the UK."

Please also suggest any additional points you need answers on in the forum link at the end of this article or using the Twitter hashtag #MSEphones4u.

Additional reporting by Paloma Kubiak.