Thank you for your question. It does seem that you have received awful treatment and so I would make a formal complaint to the entry clearance manager or indeed, the British High Commissioner at that entry post.
You haven't said on what grounds your wife's application has been refused and so I cannot comment on whether the documents you have supplied are correct.
I would advise that if you are within the 28 day period to appeal the decision, you do so just to protect your appeal rights. An appeal can take 9 months and if this is too long or your complaint resolves the situation then you can always withdraw it. It is (at the moment) free to lodge an appeal with the Tribunal and so if you prepare the grounds of appeal yourself, you won't be losing anything but you will protect your position in case the other avenues do not work.
When you make your formal complaint, as well as outlining the treatment you have received and your dissatisfaction with the same, also clearly outline the rules that you are expected to meet (set out below) and go through the evidence you have provided showing how your application meets the rules and why the review that was undertaken was wrong.
I have had success by making a formal complaint before; the entry clearance managers are often slightly more helpful and knowledgeable than the entry clearance officers who have only minimal training or with the High Commissioner himself. You may at least this way get an apology as well as having your application properly considered.
If you find that you don't meet the rules or there is some basis to the refusal, you could consider submitting another application which does meet the rules. This will get you a quicker decision than an appeal but it will unfortunately be decided by the same people and so if they made a poor job of deciding your first application, the renewed application may not be any different.
The appeals process is very long but unfortunately is sometimes the only way have your case properly decided.
In summary, lodge a formal appeal to protect your appeal rights and at the same time, make a formal complaint to the BHC and or entry clearance manager. If this complaint fails, lodge a further application.
For detailed advice on the specific merits of your wife's case, it may be worth going to see a solicitor who specialises in UK immigration law and getting their view on your application and documents as they may be able to show you where your application falls down.
I hope this answers your question in which case please accept. If you have any further questions, please ask.
Rule 281of the Immigration Rules
281. The requirements to be met by a person seeking leave to enter the United Kingdom with a view to settlement as the spouse or civil partner of a person present and settled in the United Kingdom or who is on the same occasion being admitted for settlement are that:
(i) (a)(i) the applicant is married to or the civil partner of a person present and settled in the United Kingdom or who is on the same occasion being admitted for settlement; and
__ __(ii) the applicant provides an original English language test certificate in speaking and listening from an English language test provider approved by the Secretary of State for these purposes, which clearly shows the applicant's name and the qualification obtained (which must meet or exceed level A1 of the Common European Framework of Reference) unless:
(a) the applicant is aged 65 or over at the time he makes his application; or
(b) the Secretary of State considers that the applicant has a physical or mental condition that would prevent him from meeting the requirement; or;
(c) the Secretary of State considers there are exceptional compassionate circumstances that would prevent the applicant from meeting the requirement; or
__ __(iii) the applicant is a national of one of the following countries: Antigua and Barbuda; Australia; the Bahamas; Barbados; Belize; Canada; Dominica; Grenada; Guyana; Jamaica; New Zealand; St Kitts and Nevis; St Lucia; St Vincent and the Grenadines; Trinidad and Tobago; United States of America; or
__ __(iv) the applicant has obtained an academic qualification(not a professional or vocational qualification), which is deemed by UK NARIC to meet the recognised standard of a Bachelor's degree in the UK, from an educational establishment in one of the following countries: Antigua and Barbuda; Australia; The Bahamas; Barbados; Belize; Dominica; Grenada; Guyana; Ireland; Jamaica; New Zealand; St Kitts and Nevis; St Lucia; St Vincent and The Grenadines; Trinidad and Tobago; the UK; the USA; and provides the specified documents; or
__ __(v) the applicant has obtained an academic qualification (not a professional or vocational qualification) which is deemed by UK NARIC to meet the recognised standard of a Bachelor's degree in the UK, and
(1) provides the specified evidence to show he has the qualification, and
(2) UK NARIC has confirmed that the degree was taught or researched in English, or
__ __(vi) has obtained an academic qualification (not a professional or vocational qualification) which is deemed by UK NARIC to meet the recognised standard of a Bachelor's degree in the UK, and provides the specified evidence to show:
(1) he has the qualification, and
(2) that the qualification was taught or researched in English.
__(b)(i) the applicant is married to or the civil partner of a person who has a right of abode in the United Kingdom or indefinite leave to enter or remain in the United Kingdom and is on the same occasion seeking admission to the United Kingdom for the purposes of settlement and the parties were married or formed a civil partnership at least 4 years ago, since which time they have been living together outside the United Kingdom; and
__(b)(ii) the applicant has sufficient knowledge of the English language and sufficient knowledge about life in the United Kingdom, unless he is under the age of 18 or aged 65 or over at the time he makes his application; and
__(b)(iii) the applicant does not have one or more unspent convictions within the meaning of the Rehabilitation of Offenders Act 1974; and
(ii) the parties to the marriage or civil partnership have met; and
(iii) each of the parties intends to live permanently with the other as his or her spouse or civil partner and the marriage or civil partnership is subsisting; and
(iv) there will be adequate accommodation for the parties and any dependants without recourse to public funds in accommodation which they own or occupy exclusively; and
(v) the parties will be able to maintain themselves and any dependants adequately without recourse to public funds; and
(vi) the applicant holds a valid United Kingdom entry clearance for entry in this capacity
For the purposes of this paragraph and paragraphs 282-289 a member of HM Forces serving overseas, or a permanent member of HM Diplomatic Service or a comparable UK-based staff member of the British Council on a tour of duty abroad, or a staff member of the Department for International Development who is a British Citizen or is settled in the United Kingdom, is to be regarded as present and settled in the United Kingdom.