With the CAA's experience of the ATOL (Air Travel Organisers Licensing) scheme, which protects monies paid in advance by holidaymakers, I would have thought it easy to apply similar principles to Air Training Organisers.
Students' money would then be protected via a bond, ususally an insurance policy, and the training organisation would still have use of the cash.
Training organisations would have to submit audited accounts and demonstrate financial stability on an annual basis before a licence were issued.
Lysander (one time ATOL holder)