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.
Indeed and that is what happens in our group. We all own an equal share of the aircraft however we have a group 'Chairman', he has designated members of the group as able to carry out check flights with interseted parties. So if, say, I flew with someone and they were fine, I would inform the Chairman that they were ok on the flight, likewise if they made a hash of it I would just tell him as such as well.
It works very well, we have one interested person who never even made it off the ground!
J.