Copilot not working for one on one calls

We have copilot enabled on our tenant with Transcription set to on and Copilot set to On only with retained content.

We cannot turn copilot on in 1:1 direct calls with an error stating:
'Copilot isn't available. Transcription is disabled for your org. To do its thing, Copilot needs the transcript'.

Is this actually a bug or is it just not supported for 1:1 calls, hard to get clarity,