In fact, I think it would be critical to do so. Students may perform well on the exam for any number of reasons other than having a good teacher, and they may perform poorly for reasons other than having a bad teacher.
> If the assessment of a student's learning comes from somewhere else, what other mechanisms could we use to evaluate the effectiveness and (or) competence of their instructors?
Well, it's not like we can use exam scores now to evaluate the college-level teachers. The sad truth is that to a large extent, most people who teach at the college level are evaluated primarily on things other than teaching. I know I'm a pretty good teacher not because of good test scores, or good evaluations, but because students come back to me months or years later and talk about things they learned in my class(es) that set them up well to find their way through a later class or a job. But that kind of feedback is very difficult to quantify.
With all the testing in American universities, the British (?) system is quite refreshing.
My uni also weighted the exams so that the final year contributed much more to the final "grade" than the first year, effectively putting most of the pressure on the final term of the last year.