As 'this is my username' points out this is a 'Training Flight' requirement and many people will use it to try a new experience for the first time so competence is not necessarily expected.
However, in the rare instances that an Instructor deems that a Pilot they flew with is unsafe (to themselves and/or others) then I do not believe that they should complete the 'Revalidation by Experience'; and if offered the Pilot's logbook to sign they should also write in "further training recommended" (so that Examiners would also know to politely decline any request for 'Revalidation by Experience' based on that particular training flight).
Just because someone is authorised to take 'Administrative Action' on behalf of the CAA does not mean that they are mandated to do it if they don't want to.