I wouldn't so much say they "made it up" as "interpreted it" ...
As far as the regulation itself is concerned, I have to agree with EFLI - i.e. that this goes much further than 'interpretation'. The reg is very clear in saying, without any qualification, that CUs in domestic installations must be made of non-combustible material (or in a non-combustible enclosure). That is not open to any interpretation, since it is written as a simple explicit requirement which applies to
all CUs in domestic premises. If someone claims that it only applies, or 'applies more' (whatever that means) in some situations than in others, then they have simply "made that up", because it is certainly not what the regulations says.
I don't think anyone is suggesting that, in cases like this, what they have "made up" is necessarily unreasonable. Some may even believe that, in some cases, it is 'more reasonable' than what the regulation has actually said, but that's not the point.
The problem arises not in relation to the regulation (which leaves no room for 'interpretation') but with the coding in EICRs - which, in the absence of any explicit 'rules' is entirely a matter of judgement (which is essentially a matter of personal 'interpretation' of the meaning of codes). You seem to imply that 'giving no code' to a non-compliance might be an option but, although BS7671 is not very clear about this, I think that many/most people probably feel that every non-compliance (with current regs) should be given
some code.
If one takes that view/interpretation, the greatest problem would seem to be the loss of 'C4' as an option (meaning something like "compliant when installed but not compliant with current regs, but satisfactory"). In the absence of that, the least an inspector can do (with a C3) is to 'recommend improvement', and I'm sure that a good few would feel it inappropriate to 'recommend improving', say, a CU which was brand new and fully compliant when installed, say, five years ago (and might even be described as 'cowboys' for recommending work that they didn't believe was necessary).
However, within the constraint of that problem, it's all down to personal judgement. No trade organisation necessarily has any better judgement than any individual electrician about these matters, and certainly has no authority to impose it's views (other than on its members, whose membership might require them to comply with the organisation's views, even if they don't agree with them).
.... so how about risk assessing how much of a problem it'll be if an incident does ago... would a resultant fire impede the escape route from the same, if it would not, then its low likelyhood and unlikely to result in deaths then it is hardly worth worrying about, if it is located on an escape route, its still unlikely to occur, but deaths are now possible in an extreme case, so we now advise that it might be best doing something about it.
That seems to imply that if a risk assessment results in the conclusion that "it is hardly worth worrying about" (which, frankly, I would expect to be the conclusion in most cases) that you believe that it is then acceptable to not code the non-compliance at all - but, as above, I'm not at all sure that is the intention of BS7671, nor the interpretation of many electricians about what is required of an EICR - i.e. I think (albeit perhaps incorrectly) that most probably believe that any non-compliance with current regs has to be given
some code (which, as above, implies that they are at least 'recommending improvement', whether they feel that necessary or not).
Kind Regards, John