The orange company tells you not to reduce below S in flaps 1.
In my previous company option 2 was accepted. (they operated standard Airbus SOP)
In my understanding you can fly the airbus anytime between Vls and Vmax. S and F are retract speeds and in no way resemble an aerodynamic signifant speed with regards to maneuvering (both have entirely different margins, and are represented by different point on the L/D curve).
However they are used as managed speed targets by the FMGS, I guess for simplicity.
S and F are suitable as speed targets because they always are between Vls and Vmax and especially S is a good ballpark speed for the intermediate approach. Assuming that you would always fly a decelerated approach there would be no need for actual flap maneuvering speeds. But how different is reality. I would be happy to fly below S speed with flaps 1. (I am guessing that the delta Vref for flaps 1 would result in a Vapp below S anyway). However my company does not allow it.