they refused to change the address on the basis that I don’t currently have a valid class 2 issued in UK. I don’t see how that’s relevant to the address change.
I agree with you, the medical is not part of the licence. In fact if you submit a self medical declaration and restrict your flying then a medical is not required. The logic would be that such pilots cannot change their address. They are simply wrong. Was it an auto reply to your application or was it from from an individual?