hang on... is the OP in Phantom Mode or Naza Mode? Both toggles on the RC operate very differently in the 2 modes.
In Phantom mode, it's my understanding that the left toggle does nothing and the right toggle can be set to trigger FailSafe or NormalFly but it's not actually GPS or ATTI mode.
GPS and ATTI modes and CL/HL on the left switch only activate if you switch your Phantom to Naza mode I believe.
fwiw, I stick to Phantom Mode and use the right toggle to trigger failsafe all the time (I use it as a rth/descend autopilot) and regain control whenever I want. Granted, it takes about 2 seconds for FS to trigger or disable... the LED lights on the bottom indicate when the phantom responds to the command (yellow for FS, green for NormalFly assuming you have GPS lock)
agree you should make sure your RC has updated firmware. If it didn't, then definitely upgrade it and then do calibrations both in RC assistant and Phantom Assistant. You can verify your S1 toggle sending commands in Phantom Assistant... on the Basic / RC tab in the Control Mode Switch section... this is where you changed the toggle to be Failsafe yes? If NOT, then Failsafe is being triggered by some other means.
anyway switching the switch should show what mode it's sending via the slider below, just like how the command sticks and X1 levers move above when you move them around... the little chevron should be pointing to NormalFly and when you toggle the right switch down it will move to Failsafe. toggling the switch back up the chevron should move back to NormalFly.
again, my above paragraph only applies to Phantom Mode. disregard if you switched to Naza mode