Absolutely a systemic failure rather than the fault of the TC in command. Currently SLF due to start ab initio training this year I can sympathise with the F/O in this situation. Having laid out vast sums of money for his training he's hardly likely to volunteer himself not suitable - it was the responsibility of the head of training to drum him out because from what was written in the AAIB report he clearly didn't cut the mustard.
In his shoes, if i got to doing a TR and was that inconsistant i would rather be cut loose with a huge debt than have the deaths of pax on my conscience - that said i haven't much incentive to quit if my instructors are happy to let me continue.