Hm, yes, they aren't strictly 'POWs', but since espionage is a crime under British law, in wartime they are subject to harsh penalties, which includes execution. The treatment these guys got was pretty rough. There was a detention centre on the outskirts of London where the German agents captured were sent, run by a particularly ruthless Scot who was, to all intents and purposes good at his job.
Tony Blair's government removed the death penalty for high treason and espionage. Tony Blair it is said cooperated with a foreign power to create a dossier, latter proven to be a fake which was used to shop the Iraq wars on the basis of non existent WMD and perhaps thought they had a remote possibility of being hoisted by their own petard. To this day Tony Blair is regarded as somewhat of a war criminal. It's worth nothing that Germans were sentence to death and executed at Nuremburg for the crime of 'waging aggressive war' which is essentially starting a war on false pretences. This technique of creating a fake causes belli based on the evidence of another countries agencies, circular references in media is nothing new.
The failure in German intelligence is a topic in itself. I suspect it does lie in the treaty of Versailles which probably prohibited it. The treaty certainly prohibited code braking by the German military which lead to this weakness.