Let them know as soon as decision is made hat they have been rejected for the specific course they applied for and ask if they want to be considered for x course(s) instead
But it may not be possible to give a decision earlier rather than later. That is the point - as made by a number of us on this thread who actually work in universities. I'm a former admissions tutor and we would often do this - if an applicant didn't quite meet our criteria for the course they applied for (usually an oversubscribed course, in demand) but we thought they had potential, we might offer for a cognate course that was less oversubscribed. But that did mean waiting to see if we couldn't squeeze a promising applicant in.
It's standard practice. It's offering an applicant a choice - and a way of trying to keep the bight ones! But they don't have to accept that offer. That's fine. I think in this case, the parent (OP) has had their pride hurt in that her DD wasn't made the offer she thinks should have been made. I remember an hilarious thread by a parent incensed that Edinburgh didn't fall over themselves to take her DD
I really don't get the ire about Exeter - it's a very good university, trying to do its best for the students there - I've seen how they do this from the vantage point of an External Examiner when my role was to call them to account for their teaching practices & standards. From that inside knowledge, in my field, I'd recommend its degrees unreservedly.
Academics aren't so territorial as some of you seem to think - in my field, I can list about a dozen excellent degree courses as well as my own, and the differences between them which might appeal to applicants.
As another poster (also a university professor) says upthread - Exeter isn't the only place to do this, and shouldn't be singled out. It's common practice, and not a bad practice - it's trying to give applicants a second chance.