Additions to Mortgage Payments

I'm having a fight with my Mortgage lender who ceased to collect Insurance premiums and then added them to my mortgage advance without my consent.
I've terminated the mortgage and asked for a settlement figure, pointing out that the real amount is a lot less than what they are asking because of that action.
They are now threatening to reposess the property.
The real amount outstanding is less than £3000 and the property is worth about £250,000.
Can they legally do that?
Is there anyone I should refer the case to?
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