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Trusted Device locks phone - can't unlock

I am using lollipop after a factory reset to stop battery drain and burning my leg.

All is well but when I tried to use the Trusted Devices on Smart Lock it saw my LG G Watch R and added it as a trusted device but after that when I turned off the screen and turned it on again I was presented with the usual lock screen but without the fingerprint swipe prompt and with a little lock icon at the bottom. There was no way to get past this screen Swiping fingerprint did not work, clicking anywhere on the screen or button pressing did not work. I had to restart the phone, go into Smart Lock settings and disable Trusted Devices before I could again get past the lock screen with a finger swipe.

This is exactly backwards of what it should do. With a trusted device connected there shouldn't even be a lock screen and what I get is a lock screen that won't open.

I did not try using Trusted Devices with the earlier version of Android so I don't know if this is a lollipop issue.

Any ideas? Other S5 owners tried this?
 

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