This privileges confident speakers. (The same way written tests privilege confident readers, and standardized written tests privilege those who have the time and resources to study the standard.)
It certainly could, but it also certainly couldn't. I imagine being confidently incorrect is likely to produce a worse result than being unconfidently(?) incorrect, for example.
Similarly, a less confident speaker may end up spending more effort justifying their answers, which could better expose their knowledge.
I think it would depend quite a bit on the examiner in this case. Some people may even be simply biased against particularly confident speakers, particularly considering the relative positions of the speaker and examiner.
If the examiner isn't much more knowledgeable about a topic than their students, then something else has gone wrong.