[BUG] Desktop app hides "Auto" permission mode and shows "Bypass permissions — Disabled by your organization" on a personal Claude Max account (CLI unaffected)

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

Since 2026-08-19 ~16:30–16:42 UTC, the Claude Code permission mode picker inside the Claude desktop app no longer offers Auto (only Manual / Accept edits / Plan), and Bypass permissions is shown as "Disabled by your organization". Sessions started from the desktop app silently ignore permissions.defaultMode: "auto" and start in default/acceptEdits. The same account, same machine, running claude from the terminal still starts in Auto mode normally.

The account is a personal Claude Max 20x subscription (organizationType: claude_max) — there is no enterprise org, no admin, and no managed policy on the machine, so the "Disabled by your organization" label is misleading.

Environment

• Claude desktop app: 1.32885.1 (macOS, Darwin 25.4.0)
• Claude Code bundled by the desktop app: 2.1.234 (~/Library/Application Support/Claude/claude-code/2.1.234/, installed 2026-08-18 22:35 local)
• Claude Code CLI on PATH: 2.1.235 (~/.local/bin/claude)
• Account: personal Claude Max (no org / admin)
• ~/.claude/settings.json:

{ "permissions": { "defaultMode": "auto" }, "autoMode": { "allow": ["$defaults"], "soft_deny": ["$defaults"], "hard_deny": ["$defaults"] } }

• /config still shows "Default permission mode: Auto" and "Use auto mode during plan: true"

What Should Happen?

• Auto mode available in the desktop picker (it is GA for all plans per feature-availability (https://code.claude.com/docs/en/feature-availability.md)), as it was until 2026-08-19 16:30 UTC.
• If a mode is gated, the label should not say "by your organization" for accounts with no organization/admin, and the app should warn that the configured defaultMode is being overridden instead of silently falling back.

Error Messages/Logs

┌───────────┬────────────────┬─────────┬─────────────────────────────────────────────────────────┐
│  Session  │   Entrypoint   │ Version │                     permissionMode                      │
├───────────┼────────────────┼─────────┼─────────────────────────────────────────────────────────┤
│ df72646d… │ claude-desktop │ 2.1.234 │ auto at 16:08Z → acceptEdits by 18:21Z (same session)   │
├───────────┼────────────────┼─────────┼─────────────────────────────────────────────────────────┤
│ 4374d692… │ claude-desktop │ 2.1.234 │ default from start (16:42:50Z) — first affected session │
├───────────┼────────────────┼─────────┼─────────────────────────────────────────────────────────┤
│ 7f66c445… │ claude-desktop │ 2.1.234 │ default → acceptEdits (18:42Z)                          │
├───────────┼────────────────┼─────────┼─────────────────────────────────────────────────────────┤
│ f6aaa3a8… │ claude-desktop │ 2.1.234 │ acceptEdits (19:08Z)                                    │
├───────────┼────────────────┼─────────┼─────────────────────────────────────────────────────────┤
│ af960f6f… │ cli            │ 2.1.235 │ auto at start (19:17:58Z)                               │
└───────────┴────────────────┴─────────┴─────────────────────────────────────────────────────────┘

Last desktop session with Auto: 16:30:15Z; first without: 16:42:50Z. Auto worked normally before (e.g. 2026-08-18 on 2.1.229). No app update or local config change in that window (bundled 2.1.234 was installed the previous day).

No managed policy present:
- /Library/Application Support/ClaudeCode/ — does not exist
- ~/.claude/policy-limits.json, ~/.claude/remote-settings.json, ~/.claude/remote-settings-consent.json — do not exist

Desktop-side per-account flags in ~/Library/Application Support/Claude/claude_desktop_config.json → preferences:
"bypassPermissionsGateByAccount": { "<accountId>": false },
"bypassPermissionsOptInByAccount": { "<accountId>": true }
This looks like the gate being applied (presumably from the desktop app's remote config), and it only affects the desktop entrypoint.

Workaround

Running claude from the terminal (2.1.235) honors defaultMode: auto.

Steps to Reproduce

1. Personal Claude Max account, ~/.claude/settings.json with "permissions": { "defaultMode": "auto" }.
2. Open the Claude desktop app, start a Claude Code session, open the permission mode picker.
3. Actual: "Auto" is not listed; "Bypass permissions" shows "Disabled by your organization"; session starts in default/acceptEdits.
4. Run claude in a terminal in the same folder. Expected/Actual: session starts in auto as configured.

Claude Model

None

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

1.32885.1

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

_No response_