As reported by David Binney:

After upgrading to the new version of moodle 1.9.6 i have been asked to change the admin password based on the password policy default. This would normally be ok if there was one admin and that was not linked to LDAP. However, our accounts are linked to ldap so it is impossible for moodle to manage the passwords in this way. So i was wondering if there is a way that the default can be permenantly set back to false/disabled or an alternative that will not require any changes of passwords from moodle's part?