RBAC rules not working in cluster with Kubeadm

In one of our customer's Kubernetes cluster(v1.16.8 with kubeadm) RBAC does not work at all. We created a ServiceAccount, read-only ClusterRole, and ClusterRoleBinding with the following yamls but when we login through the dashboard or Kubectl user can almost do anything in the cluster. What can cause this problem?

kind: ServiceAccount
apiVersion: v1
metadata:
  name: read-only-user
  namespace: permission-manager
secrets:
  - name: read-only-user-token-7cdx2

kind: ClusterRoleBinding
apiVersion: rbac.authorization.k8s.io/v1
metadata:
  name: read-only-user___template-namespaced-resources___read-only___all_namespaces
  labels:
    generated_for_user: ''
subjects:
  - kind: ServiceAccount
    name: read-only-user
    namespace: permission-manager
roleRef:
  apiGroup: rbac.authorization.k8s.io
  kind: ClusterRole
  name: template-namespaced-resources___read-only

kind: ClusterRole
apiVersion: rbac.authorization.k8s.io/v1
metadata:
  name: template-namespaced-resources___read-only
rules:
  - verbs:
      - get
      - list
      - watch
    apiGroups:
      - '*'
    resources:
      - configmaps
      - endpoints
      - persistentvolumeclaims
      - pods
      - pods/log
      - pods/portforward
      - podtemplates
      - replicationcontrollers
      - resourcequotas
      - secrets
      - services
      - events
      - daemonsets
      - deployments
      - replicasets
      - ingresses
      - networkpolicies
      - poddisruptionbudgets

Here is the cluster's kube-apiserver.yaml file content:

apiVersion: v1
kind: Pod
metadata:
  creationTimestamp: null
  labels:
    component: kube-apiserver
    tier: control-plane
  name: kube-apiserver
  namespace: kube-system
spec:
  containers:
  - command:
    - kube-apiserver
    - --advertise-address=192.168.1.42
    - --allow-privileged=true
    - --authorization-mode=Node,RBAC
    - --client-ca-file=/etc/kubernetes/pki/ca.crt
    - --enable-admission-plugins=NodeRestriction
    - --enable-bootstrap-token-auth=true
    - --etcd-cafile=/etc/kubernetes/pki/etcd/ca.crt
    - --etcd-certfile=/etc/kubernetes/pki/apiserver-etcd-client.crt
    - --etcd-keyfile=/etc/kubernetes/pki/apiserver-etcd-client.key
    - --etcd-servers=https://127.0.0.1:2379
    - --insecure-port=0
    - --kubelet-client-certificate=/etc/kubernetes/pki/apiserver-kubelet-client.crt
    - --kubelet-client-key=/etc/kubernetes/pki/apiserver-kubelet-client.key
    - --kubelet-preferred-address-types=InternalIP,ExternalIP,Hostname
    - --proxy-client-cert-file=/etc/kubernetes/pki/front-proxy-client.crt
    - --proxy-client-key-file=/etc/kubernetes/pki/front-proxy-client.key
    - --requestheader-allowed-names=front-proxy-client
    - --requestheader-client-ca-file=/etc/kubernetes/pki/front-proxy-ca.crt
    - --requestheader-extra-headers-prefix=X-Remote-Extra-
    - --requestheader-group-headers=X-Remote-Group
    - --requestheader-username-headers=X-Remote-User
    - --secure-port=6443
    - --service-account-key-file=/etc/kubernetes/pki/sa.pub
    - --service-cluster-ip-range=10.96.0.0/12
    - --tls-cert-file=/etc/kubernetes/pki/apiserver.crt
    - --tls-private-key-file=/etc/kubernetes/pki/apiserver.key
    image: k8s.gcr.io/kube-apiserver:v1.16.8
    imagePullPolicy: IfNotPresent
    livenessProbe:
      failureThreshold: 8
      httpGet:
        host: 192.168.1.42
        path: /healthz
        port: 6443
        scheme: HTTPS
      initialDelaySeconds: 15
      timeoutSeconds: 15
    name: kube-apiserver
    resources:
      requests:
        cpu: 250m
    volumeMounts:
    - mountPath: /etc/ssl/certs
      name: ca-certs
      readOnly: true
    - mountPath: /etc/ca-certificates
      name: etc-ca-certificates
      readOnly: true
    - mountPath: /etc/kubernetes/pki
      name: k8s-certs
      readOnly: true
    - mountPath: /usr/local/share/ca-certificates
      name: usr-local-share-ca-certificates
      readOnly: true
    - mountPath: /usr/share/ca-certificates
      name: usr-share-ca-certificates
      readOnly: true
  hostNetwork: true
  priorityClassName: system-cluster-critical
  volumes:
  - hostPath:
      path: /etc/ssl/certs
      type: DirectoryOrCreate
    name: ca-certs
  - hostPath:
      path: /etc/ca-certificates
      type: DirectoryOrCreate
    name: etc-ca-certificates
  - hostPath:
      path: /etc/kubernetes/pki
      type: DirectoryOrCreate
    name: k8s-certs
  - hostPath:
      path: /usr/local/share/ca-certificates
      type: DirectoryOrCreate
    name: usr-local-share-ca-certificates
  - hostPath:
      path: /usr/share/ca-certificates
      type: DirectoryOrCreate
    name: usr-share-ca-certificates
status: {}

What you have defined is only control the service account. Here's a tested spec; create a yaml file with:

apiVersion: v1
kind: Namespace
metadata:
  name: test
---
apiVersion: v1
kind: ServiceAccount
metadata:
  name: test-sa
  namespace: test
---
kind: ClusterRoleBinding  # <-- REMINDER: Cluster wide and not namespace specific. Use RoleBinding for namespace specific.
apiVersion: rbac.authorization.k8s.io/v1
metadata:
  name: test-role-binding
subjects:
- kind: ServiceAccount
  name: test-sa
  namespace: test
- kind: User
  name: someone
  apiGroup: rbac.authorization.k8s.io
roleRef:
  apiGroup: rbac.authorization.k8s.io
  kind: ClusterRole
  name: test-cluster-role
---
kind: ClusterRole
apiVersion: rbac.authorization.k8s.io/v1
metadata:
  name: test-cluster-role
rules:
- verbs:
  - get
  - list
  - watch
  apiGroups:
  - '*'
  resources:
  - configmaps
  - endpoints
  - persistentvolumeclaims
  - pods
  - pods/log
  - pods/portforward
  - podtemplates
  - replicationcontrollers
  - resourcequotas
  - secrets
  - services
  - events
  - daemonsets
  - deployments
  - replicasets
  - ingresses
  - networkpolicies
  - poddisruptionbudgets

Apply the above spec: kubectl apply -f <filename>.yaml

Work as expected:

Delete the test resources: kubectl delete -f <filename>.yaml