Companies House data is consumed by a very large number of companies and organisations, some of whom probably are vulnerable to such attacks. Fixing them isn't something Companies House can do. The joke Bobby Tables company name that was registered deliberately wasn't actually a functioning SQL injection. If someone does try to register a name containing a real one, it seems like a good idea for Companies House to be able to reject it on those grounds. This is just giving them that ability, as part of a larger ability to reject names that are designed to mislead or facilitate fraud.
The knee-jerk HN Nelson laugh at everything the UK and EU governments do makes for tedious reading, especially when there are so many actually bad policies and laws to criticise.