Part 2: Other Provisions Section 20: Return of surplus alternative scheme assets
Section 2 of the 2008 Act makes provision for the alternative scheme for smaller banks and building societies. The 2008 Act also allows for an authorised reclaim fund to remodel the proportion of funds that it reserves for reclaims - provided that it meets its objects in section 5(1) of the 2008 Act - and, per section 5(1)(c), for any surplus funds to be distributed to TNLCF. Section 20 of the Act introduces a means for the reclaim fund to transfer additional surplus money from the alternative scheme back to the participant to be distributed to local or aligned charities. This is included as new section 2A in the 2008 Act.
	Subsection (1) of the new section 2A in the 2008 Act specifies that an authorised reclaim fund may only return surplus money if it no longer needs to retain the funds, for example for the purpose of meeting reclaims. The section then sets out the steps the reclaim fund must take if that condition is met in order to transfer the additional surplus money to the alternative scheme participant.
	Subsection (6) prescribes that the alternative scheme participant must consent to receiving surplus funds from the reclaim fund. If it does not consent, subsection (7) allows for the reclaim fund to transfer these surplus funds to TNLCF.
	Subsection (8) requires the alternative scheme participant that has received surplus funds to transfer them to charity. Subsections (9) and (10) define an eligible charity as one which:
is considered to have a special connection with the smaller bank or building society; or
will use the money to benefit communities which are local to the smaller bank or building society's branches.
	Aside from this new section, the alternative scheme remains as it is. It continues to be available to those smaller banks and building societies that meet the assets-limit condition. Its scope has not been extended to cover new assets or participants.