The misunderstanding that it does has arisen because of lack of clarity and intention in the original drafting of the law, which was written for an entirely different contingent of transsexuals, and in a very different set of circumstances.
AND - because Stonewall has widely pushed an intentional misinterpretation of the law to the degree that the lie has, to many people, become the truth.
A lot of people have been led to believe that gender identity is a protected characteristic, and that a GRC makes a man for ALL intents and purposes, a woman, with all the rights and protections of a woman.
Neither of these is true.
Gender identity is NOT protected.
A GRC is a "legal fiction" which prevent the owner from being discriminated against because of his/her preferred lifestyle. It doesn't confer an automatic right to invade spaces where women are vulnerable. The safety, privacy and dignity of women is protected by the law* - or would be if it were properly applied and enforced.
Capture of organisations, including the police and the NHS has enabled this hideous travesty we have now.
*Though it would benefit from a legal definition of both sexes, based on biological fact.