Of course the real problem with a non-instructor completing a 28 day check is what happens if the pilot being checked is not up to standard.
Simple. The designated check pilot simply informs the hirer, on behalf of the owner of the plane, that he/she is not allowed to rent/borrow said plane from the owner. And please contact the owner to see what further steps are required. No licenses are revoked, the CAA is not informed, no legal action taken. Simply a statement that the owner does not want the hirer to fly his aircraft. That's it.
Note - I'm assuming here that the owner has told the designated check pilot the criteria by which he wants prospective or recurrent hirers to be judged. I imagine instructors will, by default, use the Practical Test Standards as criteria, and so should check pilots who only hold a PPL. But if the designated check pilot (FI or not) doesn't know the criteria the owner wants to apply, then the club check doesn't make sense at all and becomes simply a money-making exercise.
The PPL is not qualifiued to decide that and also they are not qualified to provide instruction to bring the pilot up to the required standard.
No qualification is required to teach somebody something, as long as this is not for the initial issue or renewal of a formal rating or license. I've been taught aerobatics by somebody who formally only holds a PPL, but is an excellent aerobatics pilot, licensed aerobatics display pilot etc.
Note that like everything else, the flight plan does not provide for a change in pilot in command.
A flight plan also does not allow a change in the POB number. Does that mean that no babies are allowed to be born on board, or people are not allowed to die on board? Come on, you and I know that a flightplan can be amended in flight if necessary. Within this thread, this is the worst argument I've heard. And in any case, if the hirer is PIC for the whole flight, no flight plan amendment is necessary.