Postgresql docker: SCRAM authentication requires libpq version 10 or above

Question

Trying to use PostgreSQL 14 with Django using docker-compose

version: '3.7'

services:

  web:
    build:
      context: .
      dockerfile: Dockerfile
    container_name: dev__app
    image: backend-dev
    command: ["/scripts/docker/wait_for_it.sh", "database:5432", "--", "/scripts/docker/docker_start.sh"]
    volumes:
      # Make /src directory editable which updates django app when code is changed
      - ./src:/app
    depends_on:
      - database
    env_file:
      - .env
    environment:
      - DATABASE={'ENGINE':'django.db.backends.postgresql','NAME':'app_dev','USER':'app_dev','PASSWORD':'app_dev','HOST':'database','PORT':'5432'}
      - CELERY_BROKER_URL=amqp://rabbitmq
    ports:
      - "8000:8000"
    restart: on-failure

  # database service
  database:
    image: postgres:14
    container_name: app_db
    environment:
      POSTGRES_PASSWORD: app_dev
      POSTGRES_USER: app_dev
      POSTGRES_DB: app_dev
      POSTGRES_HOST_AUTH_METHOD: md5
      POSTGRES_INITDB_ARGS: "--auth-host=md5"
    volumes:
      - app_database:/var/lib/postgresql/data
    ports:
      - "5432:5432"

But every time I run it using

docker-compose up --build

It gives the following error

django.db.utils.OperationalError: SCRAM authentication requires libpq version 10 or above