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I think he should of checked facts before advising you, a COC includes as you say increased income which make you not eligible for HB or moving home.
As neither apply you are continuing with your claim to HB under the old rules.
I believe that only a closed claim constitutes COC, as you are not stopping claiming HB there shouldn't be a problem.
If there is still an entitlement there is no reason to close the claim, check again with the Local Authority, do you have access to face to face at your council offices, ask for written information, check the councils website to see if you can contact by email (mine does) and eventually send in a letter of complaint
Forums can be/are a good guide to entitlement and it is good practice to back it up with clarification from the relevant department/specialist with written confirmation to safeguard yourself.