I have done a search and this seems to be a recently introduced "feature" (i.e. I couldn't find an existing post).
I was wondering if the canvas master code recently been modified? The way how hyperlinking images works seems to have been changed. In the past one could quite easily add a hyperlink to an image, but now whenever one tries to do so it converts the image to "link" text.
The issue seems to apply to URLs as well.
While I am able to go through the HTML code and manually fix the <a> tag, it's about 10x as time consuming and is not really an acceptable expectation of less technically minded colleagues/users who may not be comfortable with HTML coding. Is there a way / a code I can get local admins to use to revert the action locally?