Let's put to one side that my first thought which was it's a dummy Railcard produced as part of an exercise at a training school.
If it was actually a Railcard issued at Loughborough Jn a few days before 16 May 2011, then the action needed depends on whether the passenger asked for a Network or a 16-25 Railcard.
If it was sold as a Network Railcard, it should be returned to Loughborough Jn ticket office (M-F 06:15-12:45, 15:20-22:00) to be re-issued properly and for the overcharge of £1 to be refunded. £26 was charged. At the time of sale a Network Railcard cost £25.
If it was sold as a 16-25 then the correct price has been paid but difficulties will be encountered in use due to the lack of a matching photocard. It should be returned to Loughborough Jn ticket office to be re-issued properly.
if you are not 16-25 years old, you cannot use this Railcard as it is a 16-25 Railcard
That's an over-simplification. If the Railcard was sold as a result of a valid application for a 16-25 Railcard, whether or not the holder is now over 25 or at the time of sale was a full-time student, my recommended action is above.