I don't think so, because it would also imply they were also throwing away anything non-numeric, and I really hope nothing that stupid was going on. When the change happened everyone had to establish a new password.
I read it as “we have been asked to integrate an ancient system that we can't update (or more honestly in many cases: can't get the higher-ups to agree to pay to update), so are bringing out other systems down to the lowest common denominator”. That sort of thing happens too often when two organisations (or departments within one) that have different procedures, merge or otherwise start sharing resources they didn't previously.
I read it as “we have been asked to integrate an ancient system that we can't update (or more honestly in many cases: can't get the higher-ups to agree to pay to update), so are bringing out other systems down to the lowest common denominator”. That sort of thing happens too often when two organisations (or departments within one) that have different procedures, merge or otherwise start sharing resources they didn't previously.