"Enforce password protection on files shared to this circle" not working

Maybe I’m missing something obvious, but this is not working for me.

I create a circle and add members. Set “Enforce password protection on files shared to this circle” to true in circle config.

I create a shared folder with the circle and add some files. Now with any circle member can ask for sharing public link. No password enforced

Is this a bug or I’m missing something? This is truly confusing for circles administrators.

Tested on both nextcloud 26 and 27