Some countries, and I don't know about the UK specifically, have requirements at state-funded universities when it comes to hiring.
One such requirement is that someone cannot be hired directly. The position needs to be opened and announced in some public medium, and kept open for at least X time so everyone has time to apply. Then interviews, etc., are carried and the best candidate is hired, if one is found.
Another requirement is that those with a conflict of interest with any of the candidates should state so. And hopefully excuse themselves from the hiring committee in order to not influence the result, independently of whether this is mandatory.
In practice, sometimes a candidate has already been chosen in which case the position requirements are tightened, if possible, to ensure their champion is the right fit for the position. This leads to positions, which have already been filled, being opened with the sole purpose of meeting hiring regulations.
This is the most important part. I'd like to speak of consequences.
Raising a complaint brings you little or no benefit, but might gain you an enemy:
The end result may or may not change, but complaining will ensure you're not hired. The group leader is the accused here, sounds unlikely he'll hire you to his group after your complaint.
The group leader might affect others' impression of you, not only on this particular group but on other locations as well where he might know someone. If he didn't bother excusing himself from interviewing his sibling (which is morally reprehensible, if not illegal) then this seems a possibility.
Between two prospective candidates of equal competence, I'd guess the one most likely to be hired is the one not known to be a troublemaker.
There might be some degree of privacy when presenting a complaint, but I don't know how these are processed. Meaning there's a chance the accused party would not know who presented the complaint. In this case in particular, you're simply pointing out something that is easily proven. You don't have to present a lengthy justification.
Complaint without complaining
A simple email to the right person asking whether such behavior is allowed by the institution's regulations might be all is needed for someone to look into it. You could add a note stating you'd like your identity to be kept private for fear of reprisals. But without an official complaint it's possible they'll ignore it.