Local authorities are considering plans to restrict promotional efforts by payday loan companies, by forbidding them use of billboard advertising.

Medway and Cheshire East councils are debating whether to follow the lead set by Plymouth City Council, which has prohibited controversial lenders from making use of city centre hoardings.

The moves amount to a step change by local authorities against the controversial firms – which Parliamentary spending watchdogs have accused of making unfair profits from vulnerable people on low incomes, by brokering loans which often spiral out of control.

Many authorities, such as Cheshire West and Chester Council, Liverpool and Manchester city councils have already blocked their local authority computers, such as those found in public libraries, from accessing the websites of payday lenders.

Medway is seeking legal opinion on whether it could enforce such an advertising ban and Cheshire East is looking to introduce a bylaw.

‘As a council, we feel the rates of interest are immoral,’ said leader of Cheshire East, Cllr Michael Jones.

Responding for payday lenders, Russell Hamblin-Boone, chief executive of the Consumer Finance Association said: ‘Local councils are clearly entitled to take any action they deem necessary and we would support any initiatives that drive out irresponsible lenders.

‘However, we are concerned that, without evidence of its impact, these actions prevent people having access to responsible credit providers.’

Mike Dixon, deputy chief executive for Citizens Advice, warned the failure to correctly configure local support for Universal Credit (UC) claimants could ‘put rocket boosters under the pay day loans industry’.

‘We're particularly worried about people being paid UC taking up big pay-day loans, having their bank accounts emptied by pay-day loans providers and then that having a huge impact on council tax collection and the use of bailiffs,’ Mr Dixon told LocalGov.