I look at the ESC Best practice guide number 4 issue 3 and shake my head at some of the suggested codes.
We should look at the basic code
C1 = Danger Present
C2 = Potentially dangerous
C3 = Improvement recommended
The C1 and C2 are reasonable easy if there are any bare wires or live parts then C1 and if a second fault with cause bare wires or live parts then C2 that's easy enough the examples however do include however immersion heater not complying with BS EN 60335-2-7-3 and I would say the fault described may result in danger but it's not really an electrical fault and they have missed out one very important point there are plastic tanks that will stand boiling water and plastic tanks that will not and only the latter means there would be danger.
There are other points as well a RCBO-v may with a TT system where the earth is routed through the device be a C2 but often these devices have just been left as isolators also of course with TN if the earth is not by-passed then the device would still work and if by-passed then it would depend on the ELI.
But even the Guide states under "Departures from the requirements of the current edition of BS 7671 that do not give rise to danger or need improvement" states:-
Amendment 1 to BS 7671: 2008 no longer requires departures from the requirements of the current edition of BS 7671 that do not give rise to danger or require improvement to be included in condition reports.
It is very easy to miss-read I had read in the past for example "Inadequate number of socket-outlets. (Code C3 or, where appropriate C2, if extension leads run through doorways, walls or windows, or under carpets, or are otherwise being used in an unsafe manner)" as a coding but it is actually under the heading of items which should NOT be coded.
So reading the new Best Practice Guide I would say likely the fault you describe would not be coded.