at a guess the screws damage the ferrules
That shouldn't happen - if it does then the screws would also damage thicker stranded cable as well. The screws should have a flat end, which won't be a problem unless done up by a gorilla on steroids - something which would damage the thicker strands as well, if not more so.
allowing fine conductors to splay out causing loose connections
Nope. The ferrule should still contain the strands even if you cut a round hole in it with a badly formed screw. There's a risk of cutting strands, but then the loss of a small number of fine strands would have a proportionately smaller effect on the cable than cutting strands on a 7 or 19 strand cable.
Also the ferrule slightly increases the size of the conductor so some may be very tight to get in without 'modification'.
Now that I have met. Found the hole in the CU earth bar was a "snug fit" for an uncrimped 16mm ferrule, but a crimped ferrule had to be "carefully adjusted" to fit in it.
So basically the arguments come down to :
"Makes the cable too big" which could be valid, except doesn't most of this stuff now come designed to take something like 35mm cable ?
The terminal design/manufacture is defective
A while ago I tried to search for such restrictions and couldn't find any. The only reference I could find in any DNO documentations related to (IIRC) earth connections in substations where the minimum strand size was 2mm.