What are cookies?
Cookies are small text files placed on your computer by websites. These cookies are usually harmless and store information like the contents of your shopping cart or your login details to keep you from having to log in on each page.
Cookies are often required for a website to function properly ("essential" cookies), but others, such as tracking cookies don't effect the functionality ("non-essential").
The Cookie Law
On 26th May 2011, the EU announced the new cookie law. The new law came about due to privacy concerns and was thought to be a response to the rise in 'remarketing' where cookies are used to identify which websites a user has visited in the past and display adverts from those websites on third party sites. So if you've ever looked at a Dell computer, for example, you might find that the exact model you were looking at seems to follow you round the internet on completely unrelated sites.
To warn users that "non-essential" cookies are being used in this way, websites in Europe and those that serve European markets, are required to gain consent from their website visitors before placing cookies on their machine. Hence the warning messages you may be seeing a lot of.
In the UK, we were given 12 months grace to implement changes to our websites, so the official start date was May 2012.
The consequence for non compliance with the new law is a substantial £500,000 fine - but only if it is proved that not gaining consent to place cookies on a user's computer causes significant distress.
The ICO sees these cookies as "non-essential", therefore the advice is, better to avoid the fine and comply than risk it.