Hello
I've been researching military uniforms for 25 years (sad, I know), and this photo looks totally bona fide to me. The British War Medal and Victory Medal were (of course) awarded after the end of the War, so this is certainly a post-war picture.
There seem to be two possibilities; either he was a general (unlikely given that no one seems to remember this very notable fact), or he is not the man in the photo. I have, for example, come across families who firmly believed a photo of Lord Kitchener was granddad so-and-so. All this kind of mistake requires is a long enough gap.
Still, it's curious that the whole family believe this is him. Given that general's uniforms haven't changed much in the past 100 years, I'm surprised the issue hasn't come up before if the picture is hanging up in lots of people's houses.