I suspect the CAA is wary of pulling a license for "behaviour" without first winning a prosecution, because - on the occassions where the pilot employed a half decent lawyer - they have lost quite a few prosecutions.
Prosecuting pilots for e.g. fuel mismanagement is tricky because it opens a huge can of worms concerning practices widely taught in the PPL training establishment. Get yourself a decent lawyer and you will have the judge saying he wishes he could shut down some flying school...
I'd agree with that. It would be a very big and brave step to 'pull' a licence and the CAA would need evidence which was cast iron.
Now, if they recommended action such as retraining for our pilot, and he failed to comply but then flew, I suspect there might be a better case to prove the holder was an unfit person.
I'm sure none of us really wants a fellow aviator to be grounded and all reasonable steps should be taken to ensure that he can continue to fly amongst us, but only if he does so in a safe and competent manner. If that requires lots of help and training, and more importantly, the pilot is willing to play his part and take it on board, then that would be a much better result.