powerful iPod speakers/setup

Nobody cares and nobody has been prosecuted. We sell them everyday. The only way you'd get caught is if the police car is pretty much on top of yours and just happens to be tuned into the same frequency. Even if they do just happen to tune into the same frequency and hear it, they wouldn't know what car it was and they can't search every single car around them.

I forgot to mention, someone from the Humberside police bought one. Just shows how much they don't care.

That's about the size of it.    It's one of the radio-communication laws which is almost impossible to enforce given the very low power and short range of the units.  It's really only likely that the authorities would even get to know about one if  they received a specific complaint about interference or you were unlucky enough to be right on top of a monitoring station at the precise moment they were checking that frequency.

It's a similar situation with the thousands of baby monitors, cordless phones, and other similar devices which operate on frequencies not authorized for such use in the U.K.