A few days ago we deployed AIP at a user, with Office 365 E3 license, through the security and compliance center. We created three custom labels and added them to the default policy :Public, Confidential and Highly Confidential. Every time we try to apply the Highly Confidential label (the only one with the email encryption enabled) we receive the error: "Azure Information Protection cannot apply this label because you don't have permission to perform this action.Try again in a few minutes. If the problem persists, contact your help desk or administrator."
When we sign in to office 365 on the web all the labels works fine. We tried to reinstall the AIP client but the problem persists.