Most long term commercial contracts - and certainly most mortgage contracts - say that they can change the terms of the deal, usually on due notice. Due notice these days includes notice on their website, so they don't need to tell everyone individually. TBH it isn't realistic to expect zero flexibility, when the loan can last 25 years or more. Six or seven years ago, for instance, most lenders doubled their mortgage discharge fees.
Of course a lender cannot make a change which is fundamental to the original contract. That would be a potential breach of contract and entitle you to exit at their expense. IMO it isn't a breach to charge you for something that was previously free, provided the charge is transparent, reasonable and proportionate. The Market Harborough would say that such a charge is now standard in the industry, so as long as it's a reasonable amount I think they are entitled to impose it.
If I were you I would point out to them that you chose this product and overpaid precisely because of the free borrow-back, and tell them that they must give you this first borrow-back without charge. If they disagree, take it further - the FSA service is free. But beware of getting sucked into a 'matter of principle' crusade, because life is short and I don't think you have a case legally.
