I don't know about holding fee's, and have never heard of this before. In my experience, the agents consulted me with prospective tenants. My last property was between a 20 year old single female and a mature business woman and her friend. Having had problems with younger people in the past, I said I didn't want anyone under 25 living there.
The agents then checked references and did a credit check and that all came back ok. Had it not, then they would have given me the option of either accepting or declining the applicant moving in.
Did they return this holding feeto you? If you are unhappy or feel they have acted inappropriately, you should contact ARLA (Association of Residential Lettings Agents)