Does anyone think phonics teaching has any harmful effects?

[housework]

I am happy to be persuaded either way but would be and would be interested to hear all views. Am thinking about dd and whether phonics has worked for her.
DD is 7, reads very well and comprehends what she is reading on the whole. She passed the Y1 phonics test getting the magic 32 so many children got. However, she's a poor speller to the extent that an Ed Psych has suggested testing for dyslexia. I'd like to do some more spelling work with her over the summer holidays. Today I did a bit of the Alpha to Omega placement test with her. She spelt crash as 'Krash' and chip as 'thip.' I let her do the next words 'splash' and 'thrush'. She spelt these correctly. With chip, I think she knew there were 'th', 'sh' and 'ch' to choose from and just picked one of them.
The above and other incidences make me wonder. Does phonics stop a child trusting their instincts? In her case, I think she is not considering how a word looks to help her spell it. She will always fall back on a phonetic spelling unless she already knows the spelling. If school had focussed more on rote learning, regular and rigorous spelling tests, would she spell better. At the moment they're all still ploughing through phonics because the failures have to re-take this year. But there are no expectations re spelling, barely any spelling tests, no words given to learn. And dd is the type that will only do the work if school have set it.
I'm just wondering where to go from here. Thanks for reading.

[Ferguson]

I haven't waded through all this thread, but when I was first a TA, 20 years ago, we found many children (even up to Yr3) thought the Lower Case letter was the 'sound' while the Capital letter was the 'name'. Presumably today's phonics will have eliminated most of that.

[mrz]

I've met student teachers & NQTs who are still teaching that Ferguson.