Did someone call ?
I would give the same answer as every FE I know ... the FE should establish as relaxed an atmosphere as is possible under the circumstances so that the candidate can demo what they're capable of; clearly the setting of traps would not be appropriate.
My assumption at the outset is always that the candidate is going to pass, but now and again they have been put forward too early or nerves get in the way and the standard is sadly not good enough.
What I find tricky is when the bod is likely to bust airspace. As the legal Captain one must not let the aircraft enter without a clearance yet must give the candidate every opportunity to notice (and correct) the error of their ways. It can be a difficult balance to strike.
HFD