Fair For You has now posted a warning of “very high levels of demand” on its website, telling customers who have applied to the Icelandic Food Club that they may have to wait two working days for a response.
The lender also advised customers who did not receive loan documents and login details after their application was approved to wait three hours before contacting as it is struggling with high demand.
The Iceland Food Club was previously only available in parts of Wales, Yorkshire and North West England as part of a pilot scheme to support 5,000 customers, the budget supermarket loaning £1million. As the program has gone national, demand has increased dramatically.
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An independent report on the pilot project, conducted by the Center for Responsible Credit, found that 92% of customers who took out loans either stopped using food banks or reduced their use of food banks.
Access to credit also saw 71% of customers say they were less likely to fall behind on bills like rent and council tax and the same amount said they were better able to cover the essential. The program also resulted in an 80% drop in the number of customers using loan sharks.
A small amount of interest was paid on the loans originally given to people participating in the pilot, but Iceland has now provided interest-free loans as the program is rolled out nationwide. Loans can be taken out up to six times a year with a total limit of £100 outstanding at any one time.
Richard Walker, chief executive of Iceland Foods, said the loans would only be offered to people who could afford to repay them.
“The ‘Iceland Food Club’ has also been progressing well since its launch – with more than 50,000 applications for affordable, interest-free micro-loans,” Walker said. “What strikes me the most is how clearly a program like this is needed. Together with our partner Fair for You CIC, we are working to ensure that the rollout is as smooth as possible.
The supermarket has been praised for offering customers a way to keep up with rising food prices.
Labor MP Ian Byrne, who has pushed for a human right to food in recent years, also called on supermarkets to absorb price rises from corporate profits while food poverty campaigner Sabine Goodwin called for direct cash payments for people suffering from hunger.
However, Labor MP Stella Creasy criticized the move. She warned that the scheme risked “consumers spending more to spread out payments”.