Factual error: When Fleming salutes Cholmondeley and Montague, they return the compliment whilst not wearing their headdress. Members of the British armed forces never salute if they are not wearing a hat, instead they would stand to attention.
Factual error: All the Royal Naval Volunteer Reserve officers appear to wear green branch distinction cloth ('lights') between their rank rings. Green indicated electrical officers. As non-specialist officers, they shouldn't be wearing any lights at all.
Answer: During Franco's reign, 1938 to 1977, the flag (Rojigualda) had a different coat of arms, the Eagle of St. John, with 'Una Libre Grande' inscribed. It changed in 1945 to a bigger eagle, overall covering some of the red bands of the flag, so, as this is 1943, from what one can see, the flag is correct in the film.
Barndog