Having spent many years booking people for bad driving on the Motorway, and now advising on liability and traffic law after an accident in a civillian capacity, to answer the original point, there is absolutely nothing in law to prevent someone undertaking if lane 2 or 3 is being hogged.
Contrary to popular belief and what many of these fly on the wall TV programmes would have you believe, there is no specific offence of nearside overtake, in fact it was removed from the statute books when the 1972 Road traffic Act was introduced.
In its place is the section 3 offence of careless driving, but to secure a conviction for the offence the prosecution have to prove that the stanndard of driving fell well below the standard expected of a reasonably competent driver. The simple act of a nearside overtake would not be sufficient, but if the undertaking vehicle then weaves from lane to lane, then that would be a different matter.
As far as hogging lanes 2 or 3 are concerned, the law states that the left hand lane is the driving lane and lanes 2 and 3 (or 4 where applicable) are simply overtaking lanes, and unless slower moving vehicles are being passed, then the driver should return to the nearside lane when it is practicable and convenient to do so, despite the fact that many drivers would still have you believe that we have slow, fast and overtaking lanes.
So the issue really arises when there is a clear open stretch of road or where the driver is clearly not gaining on a behicle ahead in lane 1 and the driver chooses to sit in the middle or outside lane.
In this case, then the other part of the section 3 offence comes into play, "Driving without reasonable consideration for other road users" which is just another sub section of careless driving but carries the same penalty.
It used to be common place to report such drivers, especially when we had full time Motorway patrols, but things are somewhat different these days, well in my old force anyway.
In regards to civil claims, the courts are now starting to realise that the nearside overtake is not illegal and finding in favour of the driver who nipped passed on the nearside and got clobbered because of the numpty who sat in the middle lane and then decided to go back to lane 1 without first checking.
I have dealt with about 6 or 7 of these in the past 12 months and won every one (or at least my colleagues have in respect of the civil personal injury cases) and the middle lane hogger has been held 100% liable. The hogger has a statutory duty of care not only to drive in the correct lane, but also ensure it is safe to return back to the nearside lane before he commences changing position.
This type of accident is most common amongst motorcyclists, and whilst every case has to be judged according to the evidence, I have had many where the defendant third party has immidiately quoted Powell v Moody (1966) and backed it up with "Of course undertaking is an illegal manouevre" and then get very embarrased when I go back and ask them to quote act and section for the undertake and counteract Powell v Moody with Davis v Schrogins (2006)
Sorry, rambled on a bit, but I hope that answers some of the points raised.
It is better to arrive 30 seconds late in this world, than 30 years early in the next.