As other posters have pointed out, there will always be faulty, inaccurate or completely unserviceable transponders; especially the ones fitted to aircraft that don’t go near C very often.
So, given that fact, what rules should sensibly be put into place to deal with the risk that aircraft outside C (or beyond the range of a friendly controller who’s willing to confirm a cockpit reading or chase apparently anomalous returns) may have a faulty, inaccurate or completely unserviceable transponder?
I’m thinking there should be rules about:
(1) minimum distances from cloud for VFR aircraft, with the distances determined by reference to altitude and height, and
(2) eyes out of the cockpit for everyone in VMC, especially when near the ground or aerodromes,
when OCTA (or whatever the correct term is, this year).
What other rules could sensibly be put in place to deal with the fact that no technology is perfect?