Hi,
I will pass on these two forums that were experiencing similar issues:
Forums.
(3D Attributes in a 2D game - #3 by jmcmorris)
(2D positonal sounds)
Could you elaborate on:
as I am confused about the level setup.
You can move the listener, you can either attach it to the player character or the main camera. More information about the listener can be found here: FMOD Studio | Glossary - Listener.
Unfortunately, as it is a custom engine I am not sure why this is happening.
Would it be possible to enable live update and record a profiler session and keep an eye on the location of the events in the 3D view and make sure the positions of everything is as expected.