28 Claims firms kicked out of sector this year
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And a further three have had their authorisation suspended, figures from the MoJ reveal.
The news comes as the ministry releases its second annual review of claims management firms since taking on the regulation of the sector in April 2007.
Rumours are rife that debt management could soon fall under the MoJ's remit instead of the Office of Fair Trading's as at present.
Financial claims firms account for almost a quarter of all the claims companies that have had their authorisations cancelled since the start of the year.
Carl Wright, managing director of claims firm Cartel Client Review, says: "The cancellation of these firms' registration indicates that the regulator is getting tough."
He also says brokers should be wary of claims firms that offer to buy consumers' debt as they could land brokers in hot water.
The OFT recently warned brokers that some bogus claims firms are offering to buy consumers' debt for an upfront fee.
Wright adds: "Using companies that offer this service could damage brokers' reputations and drive customers to rivals.
"It might appear attractive but these companies' lack of legal experience with unenforceable credit agreements could lead consumers into deeper financial trouble and even land them in court."
The MoJ has also cautioned brokers not to be duped by bogus claims management firms offering to buy unsecured credit direct from consumers and charging upfront fees.
Robert Sinclair, director of the Association of Mortgage Intermediaries, recently branded irresponsible claims firms a cancer in the industry.
Justice minister Bridget Prentice says: "The regulation of the claims management sector was necessary to protect consumers.
"The requirement for all claims management businesses to be regulated helps ensure that consumers get better service and gives them more confidence when using intermediaries."
She adds: "The most important requirement is transparency to ensure consumers are given clear information about the options available for pursuing their claims and the associated costs. That way they are in a position to make an informed choice."
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