Actually SarahAr, you're only half right.
The law still does allow for objective separation of transexual's in changing rooms, but it must justify this (which won't be easy for most services).
Taken from the guidance on Equality Law:
The changing facilities in a women-only gym are located in a room that is only accessible by stairs. The gym owner suggests to disabled users of the gym with mobility impairments that they can change in a corner of the gym itself. This is unlikely to be a reasonable alternative method of making the service available, since it may significantly infringe upon people's dignity.
However, providing an alternative private room to change in may be a reasonable adjustment.
You must also avoid discriminating against transsexual people. Treat a transsexual person as belonging to the sex in which the transsexual person presents (as opposed to the physical sex they were born with) unless you can objectively justify treating them differently.
For example:
A clothes shop has separate changing areas for men and for women with individual cubicles. The shop concludes it would not be appropriate or necessary to exclude a transsexual woman from the female changing room as the privacy and decency of all users can be assured by the provision of the separate cubicles.
Where a transsexual person is visually and for all practical purposes indistinguishable from someone of their preferred gender, they should normally be treated according to their acquired gender unless there are strong reasons not to do so.
Where someone has a gender recognition certificate they should be treated in their acquired gender for all purposes.
and again
Generally, a business which is providing separate services or single-sex services should treat a transsexual person according to the sex in which the transsexual person presents (as opposed to the physical sex they were born with), as it is unlawful to discriminate against someone because of gender reassignment. Although a business can exclude a transsexual person or provide them with a different service, this is only if it can objectively justify doing so.
A business may have a policy about providing its service to transsexual users, but this policy must still be applied on a case-by-case basis. It is necessary to balance the needs of the transsexual person for the service, and the disadvantage to them if they are refused access to it, against the needs of other users, and any disadvantage to them, if the transsexual person is allowed access. To do this may require discussion with service users (maintaining confidentiality for the transsexual service user). Care should be taken in each case to avoid a decision based on ignorance or prejudice.