However JAR-FCL also has no legal status
Except where implemented through the ANO and the CAA has opted to issue JAA licences in accordance with JAR-FCL and as such will not issue a licence if the organisation is not Registered or an FTO.
in an aeroplane owned, or operated under arrangements entered into, by a flying club of which the person giving the instruction or conducting the test and the person receiving the instruction or undergoing the test are both members
True but as there is no legal definition of a Flying Club, it is largely an unenforceable piece of legislation. 2 people with a common interest can constitute a club no constitution or paperwork required, so problem solved. If this were enforced how would CAA FEs manage to do tests because they are not members of any Flying Club? The large schools are not flying clubs either!