I've spoke to His Majesty recently on this and families are allowed to be created, yet it all has to be write up and completed with no allowed additions to that family.
We also spoke of what if one family member was Knighted and agreed that if that does happen then the family do not gain the rank of gentry (gentleman/lady) and will have to earn that right themselves.
The only exception to join that family is through marriage, which will also need to be legit and wrote up correctly.

This has all come about due to abusing the system, we have now corrected that mistake