Hi,
I can also confirm the issue is still present as well. I have both an iOS device compliance and device restriction policy that match. I can see users daily (with iOS 14.3) not being prompted to change their device passcodes. In my test configurations, if I change the passcode expiration to a lower value, I'm prompted to change it.
For others experiencing the issue, we have adjusted our policy to mark the device non compliant after 1 day, notifying the device owner, via email that instructs them to go to the Comp Portal app to check device status. We include an email to the Service Desk for active follow-up to minimize impact. All of our mobile access to O365 services are based on conditional access rules, which restricts access based on non compliance. Hope this helps.