As I see it, there are several 'controls' built into the Licencing process.
1. Review of medical history: Your right, this does not guarantee the future. But it will highlight some people who's history means they are not suitable, or further information is required to help the FLO decide.
2. Flag on medical records: This is intended to help identify problems that may arise during the life of the certicate. Not perfect, because some people rarely see their GP.
3. References: This can be a very effective control if applied properly.
My referees are close acquaintances, is see them most days.
I have given my referees, and indeed other close family, my blessing to contact the police if they saw a change in behaviour that made them feel concerned. I put it to them, that if it was a real melt down (tiggered by some future unforeseeable event) then they'd actually be doing me a great favour.
M