This has been addressed many, many times. Here's a link to one thread, with Alexia talking about the official response. (link in text)

Essentially, failing leves is not an exploit. The devs have said that it's ok because you have to accept a trade-off. You can intentionally fail the leves to max out your SP, but you won't get the leve rewards and faction points.

I know some people who refuse to fail leves out of principle, some people who want the faction points/leve rewards, and some people who have not completed a leve in months. Personally, I'm fine with whatever players want to do. As long as it doesn't hurt my gameplay, let players do what they want.