This is what eventually worked for me -

this.addEditUserForm = this.builder.group({
            firstName: ['', Validators.required],
            lastName: ['', Validators.required],
            title: ['', Validators.required],
            email: ['', Validators.required],
            password: ['', Validators.required],
            confirmPass: ['', Validators.required]
        },{validator: this.checkIfMatchingPasswords('password', 'confirmPass')});



checkIfMatchingPasswords(passwordKey: string, passwordConfirmationKey: string) {
          return (group: FormGroup) => {
            let passwordInput = group.controls[passwordKey],
                passwordConfirmationInput = group.controls[passwordConfirmationKey];
            if (passwordInput.value !== passwordConfirmationInput.value) {
              return passwordConfirmationInput.setErrors({notEquivalent: true})
            }
            else {
                return passwordConfirmationInput.setErrors(null);
            }
          }
        }

Best would be to have a nested group inside the form group, where we have a custom validator checking the form group with password and confirmPass, so when either of the fields are changed, the validator is fired, as of previously it only fires when confirmPass field is modified.

So instead do something like this inside the outer formgroup:

// ...
passwords: this.fb.group({
  password: ['', [...]],
  confirmPass: ['', [...]]
}, {validators: this.checkPasswords}) // add a validator for the whole group
// ...

and then the validator could look like this:

checkPasswords: ValidatorFn = (group: AbstractControl):  ValidationErrors | null => { 
  let pass = group.get('password').value;
  let confirmPass = group.get('confirmPassword').value

  return pass === confirmPass ? null : { notSame: true }
}

Showing the validation error could then be done like this:

*ngIf="addEditUserForm.hasError('notSame', 'passwords')"

Of course you don't need to have a nested group, but it's better to not have the custom validator fire every time when any changes happen to the form. This way it's only fired when changes happen to this inner form group.

For those who want to add a custom validator without being forced to pass from the form group validation, it's possible to add the validator after defining the form.

One advantage of this approach is that the error is added to the form control and not to the form group. This way it's more easy to display the error associated to the field since we can check the error directly on the field/form control itself.

This is how I implemented it:

Custom validator

import { AbstractControl, ValidatorFn } from '@angular/forms';

export class MismatchValidator {

  static mismatch(otherInputControl: AbstractControl): ValidatorFn {

    return (inputControl: AbstractControl): { [key: string]: boolean } | null => {
      if (inputControl.value !== undefined
        && inputControl.value.trim() != ""
        && inputControl.value !== otherInputControl.value) {
        return { 'mismatch': true };
      }

      return null;
    };
  }
}

Applying the custom validator to the form control

  ngOnInit() {
    this.initForm();
    // The validators are set after defining the form in order to be able to access the password control and pass it to the custom validator as a parameter
    this.setValidators();
  }

  private initForm() {
    this.myForm = this.formBuilder.group({
      password: new FormControl(''),
      passwordConfirmation: new FormControl('')
    });
  }

  private setValidators() {
    const formValidators = {
      "password": Validators.compose([
        Validators.required,
        //....
      ]),
      "passwordConfirmation": Validators.compose([
        Validators.required,
        MismatchValidator.mismatch(this.myForm.get("password")) 
      ])
    }

    this.passwordRecoveryForm.get("password").setValidators(
      formValidators["password"]
    );
    this.passwordRecoveryForm.get("passwordConfirmation").setValidators(
      formValidators["passwordConfirmation"]
    );
  }

The validators are set after defining the form in order to be able to access the password control and pass it to the custom validator as a parameter.