Yes, that's not been out and about for a while.
Any route which is 50km or more has to run under EU hours and with a tachograph. The way around this, and it's a fiddle that is allowed due to the wording of the regulations rather than something that is explicitly granted, is to register a route in separate sections of less than 50km. The traffic commissioners are aware that this happens and their minimum requirements are that each section is shown on timetables as separate journeys, but an indicator stating "guaranteed connection - remain on same bus" or words to that effect is allowable. Through fares are allowed.
What has happened in your example is that the driver has selected short working displays. What he/she should have done is selected:
"Newquay, then St Agnes"
"St Agnes, then St Ives"
I have also seen this on the Land's End Coaster, which should show:
"Land's End, then St Ives"
"St Ives, then Penzance"
"Penzance, then Land's End"
and in reverse.
I knew about the 50km running you mentioned but wasn’t aware that the displays could could be set as you explained. I wonder if the couple I saw waiting at Newquay made any enquiries with First regards their journey?