I would say something to the teacher. My little brother, year 2 this year, had a similar incident last year with a parent reader, who really made him feel bad that he wasn't up there with the rest of the kids (he has an eye condition and has drops which means he can only read from one eye, and it really upset him that he was made to feel dumb when it was just that he had trouble seeing the words...), so mum went down to the school and talked to his teacher and got him changed to a different parent reader, and that made a huge different to his confidence. Not a great deal of difference to his reading, but his confidence was raelly shattered down more and more each time he had a session with this particular parent.
So, yes, I would talk to the teacher, and see if its possible to change parent readers. But try and put the focus on your son and why he would be better with someone else, and less on that the parent is a competitive gossip, or the teacher might just see this as a clash between parents, and not as detrimental to your son.
Oh, and I wouldn't worry too much that this parent might make your son look bad, as teachers are pretty clever and would know exactly where each child is at, and make her own assessment based on what she sees rather than what she's told by this parent.
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