Let's follow the reasoning:
(1) The idea is, I assume, to save pupils the anguish of missing out on something good by only one mark.
(2) Now it would be grotesquely unfair to remove an extra mark from someone who deserved 99, merely to make them feel "better" about themselves by failing thoroughly rather than failing by a mark. To deliberately mark someone down below what they deserve is, beyond a shadow of a doubt, unethical.
(3) Therefore the only option is to add a mark and award 100, thereby passing the student.
(4) Given that this policy appears to be known, a student now knows that 99 is now actually a pass-mark (since if they earn 99, they will pass).
(5) Since students are not allowed to miss out on a pass by only 1 mark (that was the original concept that drove this argument), a student now cannot be awarded 98, as they know that had they got 99, they would have been passed.
(6) By induction, ABRSM examiners are now not allowed to award any mark whatsoever below that which would earn a distinction.
An exam is a system of measurement. It should measure. Ideally it should be objective. Objective systems give set marks for set achievements. If you aren't allowed to report what the objective system declares to be the answer, you are basically cheating. I appreciate it's cheating in a good-ish cause, but it's still cheating.
What use is a set of kitchen scales that misses out 15 ounces?