The pre-entry requirements to my FI course are precisely what I decide they are going to be.
No it is not "your course" it is a course (as laid down by the Authority) which you have been authorised to provide.
JAR-FCL 1.335 specifies the requirements to be met before starting the course.
While you are entitled to turn away business, you are not entitled to say that Mr X fails to meet the requirements to start the course when those are not the requirements laid down.
It is entirely possible that Mr X can ask you (as a person so qualified) to complete the pre-entry flight test while having the intention of completing the course at another organisation - perhaps in another country.
Since this is the only element of the entry requirements that you have any involvement with, are you going to unfairly fail Mr X because they don't meet your personal higher standards?
Seems to me that you have missed the whole problem.
The problem is not Mr Y - integrated CPL - who has the skill and knowledge to pass all the requirements in minimum hours - starting an FI course because there is a good probability that Mr Y will pass the course.
The problem is that Mr Y or anyone else who has passed the course is not finished training as an FI and needs further training especially before they are unrestricted.
The day after becoming un-restricted an FI can set up their own RTF and start providing trainig to the general public. Perhaps if more Supervising FI's remembered that then they would not be so free with recomendations to have the restriction removed.
Remember that having the required hours and the required supervised solos does not automatically qualify them for having the restricftion removed.
As for;
but the industry can do what it likes
We there in is the problem. The industry can decide that it will not employ FI's until they have 500 hours PIC and a host of other requirements. That has no effect on the fact that a CPL holder who meets the pre-entry requirements, who passes the course and test can obtain an instructor rating.
Perhaps I could compare you to a driving instructor trying to reduce traffic congestion by refusing to put forward capable drivers to take their test!!
