People should actually read the article, and also Fair Play for Women's article about the FOI.
Prison instructions for trans prisoners can be downloaded here - scroll down to '17/2016 The Care and Management of Transgender Offenders'.
The prison service go by legal sex, first and foremost. They're not allowed to ask to see a GRC but they can ask for a birth certificate (the sole remaining thing a GRC is good for). If a prisoner has a female birth cert (original or obtained via a GRC) they will be housed in the female estate unless they present an exceptional risk, in which case they may be moved to a men's prison, purely because this is where the facilities are. They will still be housed separately from men and will be accommodated in line with PSI for female prisoners. TW prisoners with a GRC are treated as female in all circumstances.
There is case law directly referenced in the prison rules linked above that says that even if a tw is in prison for attempted rape, if they have a grc and hence a bc that says 'female', they must be sent to a women's prison. The bar is very low as we have seen in various cases that have made mainstream media.
Only for trans prisoners without a GRC - i.e. those who are legally male - are decisions made on a case by case basis. And the Transgender Case Board are no fools, which is why all those self ID trans sex offenders are still treated as male prisoners in the male estate.
Changing the GRA to a self-ID process would allow all of them to be treated as female. The vast majority would have to be moved to the female estate, with only the few exceptionally dangerous ones remaining in the male estate, but housed there as female prisoners.
Surgery has nothing to do with it. You can get a GRC without having had any surgery or hormonal treatment as long as you have a diagnosis of gender dysphoria and two years living as the acquired gender.
There are intact male bodied prisoners in women's prisons.
Surgery and hormones are available on the NHS, even for those in prison. The PSI also mandate that any trans identifying prisoner in either estate, with or without a GRC, must be allowed to 'live as' their preferred gender. This includes clothing, cosmetics, binders etc.
YANBU OP, male prisoners do not belong in the female estate.
Some posters may be interested to know that the consultation on changing the GRA to allow self-ID is due to open in a few weeks.
There is a petition here to ask the government to properly consult with women as this did not happen during the trans equality inquiry which gave rise to these dangerous ideas.