NEW legislation to cover victims of online bank fraud must be backdated, MP Tim Farron has insisted.

The issue has caused increasing concern and most UK banks have now signed up to a voluntary code, which came into force this week, which will require them to refund scam victims in full.

However, Mr Farron said this does not apply to current or previous victims such as the constituents who have already contacted him, and the Westmorland and Lonsdale MP told a House of Commons debate this week that the banks must widen the scheme to cover past victims.

Mr Farron pointed out that many people would not have become victims if their local bank branch had still been open as they would have carried out transactions there and would not have laid themselves open to online fraud.

And speaking later, he suggested a 'windfall tax' applied to the main banks could cover an upgraded scheme.

"Given that many banks have saved a substantial amount of money by closing branches, surely there is scope for a windfall tax which could be used to widen the compensation scheme and importantly to keep people safe," he said.