I am having the same issue. Failsafe works for PWM receiver outputs, but is not recognized by the flight controller. Running Arduplane 4.05 on a Matek F-765. SBUS is the protocol being used between the receiver and FC. Control is MFD Link. Commands from the FC remain unchanged when the receiver goes into FS, as well as when receiver power is removed or SBUS cable is disconnected.
Any thoughts as to what the issue might be are appreciated.