Hello, I am a solicitor with 20 years experience. I will try to answer this for you.
Is the anything in the communication describing the terms under which the deposit was held or perhaps referring to standard conditions on their website?
It sounds like you will have an arguable claim for return of the deposit and should consider bringing a small claim. (that is any money claim under £10.000).
Can you just tell me how did they make out to you that that is was a returnable security deposit?
You should send a letter demanding return of the money within 21 days. Tell them that if they do not return it in full you will issue proceedings against them. The method of doing this can be found here https://www.gov.uk/make-money-claim-online
Yes it does, you seem to have a decent claim and should send the letter before action and of they do not pay ot back issue proceedings.