Meanwhile, a criminal could easily just store everything on an encrypted microSD card, then eat it if anything goes wrong - the oldest trick in the book still works in the digital age :-D...
Even in the US, with amendments against self-incrimination, if the authorities already know you have encrypted some incriminating data, you can be ordered to hand over the key.
In the Colorado case, the police had intercepted a
telephone conversation in which the defendant, Ramona F.,
acknowledged her ownership of the laptop and alluded to
the existence of incriminating documents in the encrypted
portions of the hard drive.
...
I conclude that the Fifth Amendment is not implicated by
requiring production of the unencrypted contents of the
Toshiba Satellite M305 laptop computer.
Though you are right that the law in the UK seems very strict. As an international banker I would be weary bringing a master key or encrypted volume into the UK.
Whether they'll be used is another matter. People were asking "what's the difference between a plane that has been crashed into London and a plane that has been shot down over London?", to which the reply is "a plane that is shot down is, effectively, disintegrated and burnt in the air, leaving small fragments to scatter."
It sounds absurd that you have to prove your innocence. It is common principle that who accuses is responsible for proving your guilty. Besides, even in the remote situation where they could prove somehow that a pile of random bits held some confidential data, no one should be acused of not deciphering it to provide proof against himself. It sounds like inquisition :) If you deny having a deal with the devil you die, and if you confess it, you die too.