I'm bumping this because I found a solution. It's not the best possible thing to do but seems to have solved my issue.
I edited my .cfg file on /opt/retropie/configs/all/retroarch/autoconfig and added
input_l_y_minus_axis = "-1"
input_l_x_plus_axis = "+0"
input_l_y_plus_axis = "+1"
input_l_x_minus_axis = "-0"
in order to set the digital inputs as analogue (in addition to keeping them as analogue too).
It appears that the current fba core accepts only analogue (thumb)stick inputs for arcade machines that used analogue hardware such as wheels, joysticks, pedals, etc, something that wasn't a case previously and still isn't on MAME.
For anyone having the same problem (and doesn't use analogue sticks) this seems to be the only solution currently but I'm not sure if this will interfere with anything else.