Although self-re-routing makes total sense for those able to do so, I would assume that IB will treat you as a no-show and will deny all refund / compensation claims.

At which point you will have to take them to small claims court. Since presumably your direct flight will arrive earlier than your LIS-MAD-LHR route, you'd only be looking for a refund of either the unused IB ticket or the Avios for the replacement.