This article is a case study in the evolution of corporate governance forms. It focuses on the UK Building Societies Act 1986, which opened the way for competition between building societies and commercial banks and introduced a procedure for the demutualisation of a building society. We show that the Act brought about a rearrangement of property rights which destabilised the building society form. A wave of demutualisations followed in the 1990s. The main beneficiaries of change were corporate managers who used conversion to boost their earnings and status, and speculative investors (“carpetbaggers”) who profited from windfall gains. In return, there were losses to borrowers, in the form of higher costs of loans, and to communities, in the form of the closure of local branches. Far from exhibiting “evolution to efficiency”, the recent trajectory of the sector illustrates the welfare losses which can ensue when established corporate governance forms are undermined by “deregulatory” interventions.