Because... he has been here -before- that costume came into ESO, and they have not thougfht to refit him?
Though I agree that a great many NPCs would be greatly improved by refitting them with nifty costumes! Also, it would show off those costumes for more players to lust after such dashing outfits and maybe spend crowns on them...
In Oblivion - the Shivering Isles expansion he was wearing a suit that somewhat resembles the wedding suit in ESO. So it would not be lore breaking if he wears that suit
Knight-Captain of the Tamriel's Elite Sentinels ( EU server-PC)
"Courage is not the absence of fear, but rather the judgment that something is more important than fear. The brave may not live forever, but the cautious do not live at all."
In Oblivion - the Shivering Isles expansion he was wearing a suit that somewhat resembles the wedding suit in ESO. So it would not be lore breaking if he wears that suit
I have the character name Haskil, so had to make the character look like Haskil, and I find he looks better in the jester costume (with helmet hidden to show off his lovely domed head).
#1 tip (Re)check your graphics settings periodically - especially resolution.