The problem isn't the colors.
The problem is that they don't mesh into a coherent visual canvas. It looks like a 3 year old who just discovered watercolors going wild on a piece of paper with no regard for how the colors work together.
And the shapes are worse than the colors. Everything looks off, like human faces designed by aliens who never saw a human before but are trying to reconstruct it after finding the Voyager Golden Record.
You are correct, but the way you're framing it sounds like it's an accident or the result of incompetence. That's not the case, Avowed, like the Outer Worlds and so many other modern games, is deliberately pursuing an art style revolving around triviality, whimsy, and baroque excess, which will prove coherent across all of its artistic disciplines - visual, interfaces, sound, narrative, take your pick. It's some kind of infantilised post-hipsterism and actually quite honest about what sort of "experience" you're in for, it's practically aposematic.