I can't find any such restriction.
Hardly surprising as no such restriction exists in relation to the Flight Instructor rating. The only mention of a 'club environment' in Schedule 7 appears in relation to certain
licence privileges, mainly the PPL(A) and PPL(H).
It is interesting, but irrelevant, that the phrase occurs also in relation to the privileges of the UK and JAA CPL(A) (but not the CPL(H)); irrelevant because, in both cases, the phrase is preceded by the privilege to conduct aerial work flights without restriction. Consequently, it is incorrect to suggest that instructors employed by FTOs (who hold CPLs) or the Authority's FEs are acting illegally - as stated in Schedule 7, they are "
entitled to act....in a club environment" but they are not
required to do so.