Honestly can’t recall if the iPhone ever had an option to display am/pm (iPad does though but it only shows on the time stamp in the top left corner. Not on the Lock Screen or anywhere else). Never thought about it being needed anyway since it’s assumed most people will know if it’s morning or afternoon where they are. You could always submit feedback to Apple about it and hope they address it in a future iOS update. Interesting question though…just never been something I noticed so it never occurred to me that it would be an issue.
But no one on here can answer why it’s not an option or if it will be addressed. We are all users and wouldn’t have any info on Apple plans until they announce them or release an update that says it addresses it