I realize this thread is a bit old, but I'm experiencing the exact same issue. Working on a new-in-box M1 MBP and a fresh Big Sur install. FileVault kicks the error "Authentication server failed to complete the requested operation" when trying to manually turn it on. I've excluded it from our FV Enforcement policy so it shouldn't be touched at all. The enrollment process adds 2 local accounts to the machine (a local admin and local standard). When trying to use the local admin to enable via Terminal (sudo fdesetup enable), I get prompted for creds, but then get "Error: A problem occurred while trying to enable FileVault. (-69594)".
I'm kinda stumped at this point. While I don't really have a way to test reinstalling the OS outside of Jamf to confirm it, I have to think it's something to do with Jamf. I can't imagine a non-Jamf'ed machine would have this issue after the number of times I reinstalled it.
