It also makes it particularly frustrating when a tube journey takes
our balance below £5 as the top-up only applies on touch-in, not
touch-out.

I *thought* that mine had worked on both touch in and touch out at
different times, depending on the balance at the beginning and end of
the journey; was that not so?

I can only go on my limited experience. On the two occasions my balance
has been above £5 on touching in but under £5 when touching out I
definitely have not had an auto top-up applied. It might be more
complicated than I think, of course :-)