It is a very good policy for convenience, having seen the the other side - the customer support side - I think this should be implemented everywhere.

you can write the password like this: 
" abc def ghi "
and copy it to a peace of paper, or copy & paste.

It is simply easier to strip all spaces, then to keep telling all the users: 

- *"Make sure you are not copying and pasting an extra white space character"* 
- *"Type in the password manually, and do not copy-paste it"*

which is usually an answer of the question:

- *"My password is not working, even though I copied it exactly as is from the email you sent me"*