very awkward for everyone involved - a problem BA create in part by trying to "segment" seat selection between status (which is important in CW, to be fair: not all CW seats are equal!) and payment...(which is a bit silly in a business class product)
I have had similar - got effectively "asked" to move out of 64K (a very coveted private upper deck 747 CW seat, which I had specifically pre-reserved as a Gold) to allow two other passengers to sit together (no status, no payment) - so in effect one of them got the best CW seat on the plane and I got booted off to sit by the loo....THANKS
very awkward - was effectively "asked" to switch in the lounge, but it seems really petty to say no in that situation
you should at the very least push for a refund of the £88...I don't expect anything else from it though