Controversial targeted advertising company Phorm has appointed former British chancellor Norman Lamont and former Ofcom executive Kip Meek as non-executive directors. It follows the departure of the former chief operating officer and three other non-executive directors due to differences over the management and direction of the company.

Previously known as 121Media, Phorm aims to track online behaviour by inspecting traffic at the network level in order to deliver targeted advertising.

The Webwise service based on the Open Internet Exchange or OIX is presented as a form of protection against online fraud that also ensures that users receive fewer irrelevant advertisements. Others argue it is an intrusive invasion of their personal privacy.

Phorm has conducted trials with BT which some have argued were in breach of the privacy of its customers while other security and privacy experts have claimed it is deeply flawed in implementation.

Other leading broadband providers have signed up as partners. It is not clear whether they will participate since the service has been caught up in controversy. Between them they account for 70% of the broadband market in the United Kingdom. Others have said they will not use the technology.

The European Commission has written to the United Kingdom government expressing its concerns over the proposed service. The Crown Prosecution Service is apparently attempting to establish whether thousands of BT customers were involved in a previous secret trial without their consent.

Phorm issued a statement saying that Virasb Vahidi, its chief operating officer, and three other directors will leave with immediate effect “as a result of differences” with the chief executive Kent Ertugrul over “the management and future direction of the company”.

They are replaced by four new non-executive directors, including two notable names that could come in handy when dealing with the government and regulators.

The Right Honourable Lord Lamont of Lerwick was the Chancellor of the Exchequer under the Conservative government of John Major. His tenure coincided with another particularly bleak economic period, when Britain was forced out of the European Exchange Rate Mechanism, leading to a disastrous run on the pound.

Kingsley ‘Kip’ Meek is chairman of the Broadband Stakeholders Group, which describes itself as the leading advisory group to the United Kingdom government on broadband. He was previously a board member of the communications regulator Ofcom.