Rule 4 reduction

On BF, it takes two to tango, so no.  The repercussions for layers would make it impossible for them to lay a book.

If you have backed a horse at 6-1 you might not have backed it a 5s but that's what happens with these rule 4s

I get that, but similarly, he might not have wanted to lay it at 5/1 with THAT one specific horse having been taken out.  It's just tough.... 

And in BF land, voiding all bets matched when a horse was withdrawn at the start would cause £0 to be matched on a pre-off market.  They are not going to let that happen.

I misunderstood the OP; when he said "Rule 4" rather than "Reduction Factor" I thought he meant Sportsbook.  The case on Exchange has been covered by others; the Sportsbook case is a variation of the same, though since here the layer is the bookie there's an argument it could be done as a marketing/promo exercise.  Personally I don't think it would have enough appeal to cover its costs.