You might want to call them up and inquire as to what specifically it was that made your application uncompetitive.
I was sent the exact same email a couple weeks ago, and I felt the "you should consider improving..." part to be a bit generic, so I called them up to ask if there was anything specific that they could turn me onto that was the cause of the problem, so that I could focus my efforts to improve that area.
After briefly being put on hold so the woman on the phone (can't remember her rank or name) could pull my file, she came back and said "Hmm, this seems fine to me." After being put back on hold again briefly so that she could check with the specific recruiter who'd reviewed my file, she confirmed to me that it was fine and would be sent to CFRC Toronto. Sure enough, it was, and I'm not waiting to do my CFAT at the end of March.
It's a big organization and sometimes things get overlooked or mistakes get made. I'm not saying that's what happened this time too, as generally speaking it's probably far more likely that it didn't happen. But that being said, by calling, if there was an error, it may get corrected, and at the very least, you may be able to get some information on how specifically your file was lacking and what can be done to remedy it.
Cheers,
Ryan