Macquarie Premium Funding’s (MPF) bid to become the largest player in Australia’s growing premium funding market is under investigation by the consumer watchdog.

The Australian Competition and Consumer Commission (ACCC) has begun an informal review into MPF’s acquisition of Pacific Premium Funding (PPF) and submissions on the deal were due by January 31. It is believed to be the first time the ACCC has investigated an acquisition deal in the premium funding space.

MPF and PPF are the second and third-largest dealers in the $5 billion market, behind Allianz subsidiary Hunter Premium Funding. While the sector has more than a dozen players, the top three control most of it.

MPF CEO Gary Seymour, who has announced he will step down in favour of PPF MD Stuart White, says the company is co-operating with the ACCC and a decision on the deal is expected before the end of the month.

He says it is important that the sector has a number of strong players but “consolidation generally would continue to be a part of the agenda”.

“The fact is premium funding is a high-volume, low-touch business and, at the end of the day, we want to provide the benefits the brokers and customers are looking for,” Mr Seymour told insuranceNEWS.com.au.

“You need a good spread of competition but I would expect in the next 12 to 18 months there will be further consolidation.”

Mr Seymour says a union of the two premium funders is a “perfect opportunity”.

“Both businesses are very focused on delivering services to the broker market by way of product innovation and a broadening of sales teams. So we are driven by the same outcomes.

“Our origins and those of PPF are a bit different but when you sit down and look at the two businesses [the deal] is an efficiency gain to some extent.”

PPF founder and former chairman Grant Burley told insuranceNEWS.com.au he will withhold comment on the deal until an announcement on staffing is made.

Mr Burley, who has resigned as chairman of PPF, strongly opposed the creation of MPF by Macquarie Bank and broker group Steadfast in 2007.