According to the web creator Sir Tim Berners-Lee, it is not a good idea and it infringes upon consumer rights.

Two major ISPs in the UK (BT & Virgin) have already signed up to use (or be used by) Phorm to track user’s browsing history in order to do targeted advertising. I didn’t really like the idea but have become even more concerned after reading a bit more about it on the site badphorm.co.uk and reading an interview with Sir Tim Berners-Lee in the BBC technology site. He makes some interesting points so you should read it in full, but the one small comment that caught my thinking was this:

“I want to know if I look up a whole lot of books about some form of cancer that that’s not going to get to my insurance company and I’m going to find my insurance premium is going to go up by 5% because they’ve figured I’m looking at those books,” he said.

Sir Tim said his data and web history belonged to him. – extracted from the BBC Technology site

Ilegal
The BBC technology site also exposed the thoughts of the UK’s Foundation for Information Policy Research (Fipr) which was made public in an open letter. They said:

“Fipr believes Phorm contravenes the UK Regulation of Investigatory Powers Act 2000 (Ripa), which protects users from unlawful interception of information.” – extracted from the BBC Technology site (read full article)

Phorm and BT read this law differently as they have argued they are not breaking the law… similar to anyone you talk in a prison cell (I haven’t done anything wrong!).