It has always been my experience that when the CAA guys came flying with us, a training captain had to occupy the right seat so that they could sit in the left seat.
The only way they could fly with a non-training captain was to sit in the right seat which the CAA did not like over much although I have seen it done.
Now it is a while since I flew with the CAA so things might have changed but since BAL Tastic seems to know all the facts, I think it would be useful to know whether it was the CAA pilot on the radio (PNF) or the Britannia pilot (PNF).
If it was indeed the CAA pilot then I am surprised that he would use a phrase such as "Tell the Iberia to pedal faster". Indeed, if it was the Britannia pilot then I am equally surprised that he would use such a phrase in the presence of the CAA!