NotifyLink ActiveSync Solution:

When a required password is enabled on the server for an iPhone account, the user is prompted to define a lock passcode on the device.  The message "New Passcode Required" appears on the device.  If the user closes the prompt dialog box without setting a password, the device does not prompt again and will not enforce the use of a password. 

Work Arounds: 

The user can go through the device settings to enter a password.
1. Tap Settings > General > Passcode Lock
2. set Passcode.
3. Enter a new passcode, then re-enter it to confirm.

OR, on the server, disable then re-enabled the lock, to prompt the user again for a password.
1.  From the NotifyLink Administrative Web, select User Administration, then highlight the user.
2. Select User IT Policies > Device Policies > Lock Settings