We had a similar situation with our daughter. Her inner ankle bone touched the floor as she walked and she was very flat footed. After a referral to Kings she was diagnosed as being extremely hypermobile: essentially her foot was so flexible it inclined towards flatness, this is better than the situation in which the foot is locked into a position. The doctors seemed a little ambivalent and recommended that she wear insoles, these proved uncomfortable for her and didn't seem to help. By the same token, studies suggested that less support and walking bearfoot where possible would improve strength in the ankle and ultimately the shape of the foot and ankle. We went with instinct and ditched the insoles. We have however always ensured that her shoes provide extra support around her ankle. She now [at the age of 4 and a half] has an excellent arch and the doctors are very happy with the shape of the foot. We could perhaps have some residual concern about hypermobility, but generally if a person stays slim and fit it shouldn't be a problem. So, to cut a long story short, it is probably worth getting it investigated a little further, but even if the initial diagnosis is not positive, this does seem to be a condition that can improve over time.