I am not certain they encouraged the demutualisation
Can't remember which, but there were certainly some Mutuals where the Board was against a demutualisation - what then happened was that there were "takeover" attempts and votes forced upon the mutual by members/member groups, which either forced out the Board or forced them to put forward demutualisation. So, in some cases, it was driven by the members and not the Board, who tried in vain to retain the mutual status.
At that time, there was also a stampede from Joe Public to open accounts in lots of mutuals with, say, £100 in each, just in the hope of a windfall. In the same way, lots of Joe Public set up pension and other insurance products in the likes of life insurance firms like Standard Life, Norwich Union, etc., likewise in the hope of windfalls from demutualisation. Joe Public opened accounts in their droves and then used their vote to demutualise and take the windfalls.
Just like all the privatisations/listings of the utility firms. All those Joe Publics who subscribed for shares on the back of the "tell sid" campaign for British Gas and then couldn't wait to sell at a profit on the first day of trading.
Joe Public is certainly not an innocent bystander, nor victim, of the City, stock exchange, merchant bankers, etc. - Joe Public was very much in favour at the time and couldn't wait to get their hands on the windfalls.