There are a few things to consider here:
Any substantial changes in height (especially 3ft raise of lawn/floor against I guess a 6ft high fence means that you are substantially overlooked. This would likely be a planning issue. (If we build a deck we can't just put it up to any height for this reason). Investigate this with your council.
Aside from planning, your neighbour is responsible for suitable retention and any drainage implications arising from works in their garden. A retention of under 4ft/1.2m can be undertaken without a Structural Engineer, but they need to address that issue.
A fence is not designed to retain soil/water weight. Google 'Angle of Repose', and the weight of a m3 of dry topsoil vs wet and you will see a significant difference.
The fence timber used will probably be a Class of treatment designed to be clear of soil (this is what Gravel boards are intended to do, keep the fence panel above soil/water, and splashback, similar to a Damp Proof Course on a house.
https://www.thewpa.org.uk/make-sure-it-s-4
Also, by raising the soil height by 3ft (allowed by Council or not, soil retained suitably or not, provision of a decent air gap of 15cm from the retaining structure to your fence, or not), the next issue is drainage of this higher soil.
Under SuDS (2008) regs, any water that falls on that property cannot be allowed to pass onto a neighbours property or the highway. This is why you should see a Drainage channel at the pavement edge where a hard driveway slopes to the street. This has to go into a soakaway on that property. Otherwise it would be a Tresspass or other Tort.
Apologies it is quite wordy, but it is definitely worth discussing further with the neighbour and/or council
Good Luck