@bagomac
Yes managed to resolve the issue in the end. I have had a good 10- 20 more devices doing the same thing and this has worked on all of them. It seems to me that the T2 security chip has become corrupted somehow, possibly during an update. You can refresh the firmware from another mac using this guide though and after that it seems to perform as expected.
https://support.apple.com/en-hk/guide/apple-configurator-mac/apdebea5be51/mac
Hope this helps!