Ask the "contrary to regulations" chap to show you the regulation...
Nice picture (Scottish) here with a table of what's permitted - I would guess rest of UK the same...
http://www.scotland.gov.uk/library2/br/brf-09.asp
The way I read it is that the Flue must be 300mm below the OPENING window and 150mm from anything that may catch fire like a wooden or plastic window sill.
Your local council will be able to advise you - best to get it right particularly if you might one day wish to sell the property.
Good luck...
Peccavi, May 2009