List Permissions for O365 Group Members does not apply

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I have a O365 Group and a Team site but not Teams enabled. In that site I have a list called Portfolio. I have a bunch of users added as owners and members of the O365 group and they are added in to SharePoint online groups respectively.

We are managing permissions for users on individual lists and libraries which seem to be working. However when I try to have unique permissions with Owners and Members Read only access on the list, they still have full control on the list.

As shown in the image here:

Permissions

The Part I don't understand is that it says "The following factors also affect the level of access for Ashar Khan"

Where are these policies set and how do I change them?

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By default, O365 group owners would have site collection admin access to the team site. Site collection administrators are given full control over all Web sites in the site collection.

To remove the group owners from site collection administrators, go to site permission settings->Site Collection Administrators:

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