There have been cases of people with new accounts getting the "passport information does not match the account." Simply because they only used one name and last name instead of their full name.
So if your name is "Joseph Miles Smith Flyertalk" and you registered as "Joseph Smith," Iberia is claiming the account information "does not match the passport" and therefore your it is invalid.
I don't think that's a legitimate reason to refuse somebody's Avios.