My gutfeel would be with the CAA on this one - my only question would be: Why only now and why such drastic measures?
Surely steps to address deficiences over the number of years that Nationwide has been operating would have been more appropriate?
The CAA's function is to audit operators to make sure that they meet the prescribed standards - suddenly withdrawing the airline's AOC is as much an indication of failings in the CAAs oversight function as it is of failings in the airline itself.