L2TP user can't connect to any device on network

RouterOS General
1

OS: 6.46.2
Scenario: from remote location I connect to my mikrotik via L2TP/IPsec. I am able to ping the local IP of the router (10.1.1.1) but nothing else on the network (10.1.1.2, 10.1.1.3, etc).
My L2TP VPN IP is from the same subnet (10.1.1.39). I tried connecting from a different device with a different username, same result.
All I get is Request timeout for icmp_seq.
This used to work just last week. Since then the only thing I changed is upgrading to 6.46.2 (from 6.46.1).

I do not see any roles in ip firewall filter blocking this. Does anyone have any idea?

2

If client’s address is from same subnet, it requires proxy ARP on LAN interface. If it would be missing, it wouldn’t work. But I don’t see any reason why would upgrade remove it.

3

The interface had arp=enable, once I changed it to arp=proxy-arp ping was working again.
Thank you very much!