Is there no reason the CAA cannot clamp down on this, I graduated from another ATO and was pressurized to pay upfront (negotiated them down to 50:50 on the ME IR to mitigate risk, at the worst I was £9k in credit - was up their ass daily to get training done quickly when the credit balance was high!).
Buy a package holiday & the tour companies are usually ATOL protected, they usually make a big thing of it on their adverts, that way you are covered if the tour company goes bust, why not the same for the training schools?
Another thought, could Ryanair demanding foreign licenses be contributing? Ontop of Easyjet slamming the door on Modular (I trained Modular, 95% average on theory, first time passes on all theory & practical and hold an APS MCC, yet have been told several times by easyjet I have no chance of getting a job with them, as I didn’t train at ‘their’ school) there is not much call jobs-wise for UK fATPLs at the moment. I know FTA did dual licenses but if your goal is airlines, MPL easyjet or a foreign (no VAT) Ryanair mentored license is going to seem more attractive perhaps (or sit it out for a bit let the dust settle). The UK government allow Ryanair, the biggest recruiter of low hour fATPL graduates to demand foreign licenses for UK jobs then two schools go bust close together… Couple that with all the issues the MPL has, but the largest UK airline wont look at you unless you did an MPL…