Yes, a significant flaw, however, it's not that difficult to source a disposable phone number.
Individual retailers and service providers may have different policies, of course.
Same procedure as with N26 and ING online banks, though the latter didn't work due to connection problems so I had to do it at the post office.
I like prepaid because I avoid contracts whenever I can. And I liked that I can get one fast.
I understand the reasoning - they can tie an identity to any SIM card and find you pretty fast if your number/IMEI pops up in some suspicious communications, but still, privacy blah blah.
This is the country that recently was against the EU wide chat surveillance directive that surfaces every few years now.