diff --git a/lib/moodlelib.php b/lib/moodlelib.php
index d8a5bb9..855aafa 100644
--- a/lib/moodlelib.php
+++ b/lib/moodlelib.php
@@ -4553,7 +4553,7 @@ function update_internal_user_password($user, $password) {
         $hashedpassword = hash_internal_user_password($password);
     }
 
-    if ($legacyhash) {
+    if ($legacyhash || $hashedpassword == AUTH_PASSWORD_NOT_CACHED) {
         $passwordchanged = ($user->password !== $hashedpassword);
         $algorithmchanged = false;
     } else {