I think Rick Durden has the situation pretty well described:
If you are an experienced instructor and have flown with someone enough to know a bad day from an average day, and if their average performance puts them "over the line", you have an obligation to them to help them understand the risk that their flying is putting themsleves, and others into. I think the obligation does extend to helping them fix the problem, if they will let you. And possibly it goes as far as not charging them for your time in trying to help.
As Rick say, a high time instructor may only come across four or five individuals who cannot be made safe. This means that probably only 40-50 will come to your attention as potentially being very unsafe, out of these probably half will refuse help, so you may have to give free (post PPL) training to 20 odd pilots in your career (say one a year). But you will have saved their lives! And they will have probably spent alot of cash on learning to fly anyway, some of which hopefully has come your way before you feel the need to step in and 'suggest' extra training.
The biggest issue I can see is that the source of the problem is likely to be psychological, and hence you have to become something of a flying "shrink" to effect a true cure. This is obviously not something that every instructor is capable of. If you have read M. Scott Peck's book "A Road Less Travelled", you will know enough about what might be involved in helping someone overcome the problem.