I think in the OPs country there is a difference since she notes most social workers are welfare workers who decided to become therapists later. Here in the US a social work degree is extremely broad and you don't need an advanced degree to work as a welfare case worker. Welfare workers often only have bachelor degrees in social work. That is where there is confusion. People hear "social worker" or "counselor" and they think lower level. But that's not generally the case so long as the credentials are there. Someone who calls themselves a psychotherapist without a masters at least can't be licensed so to that extent they are a fraud. The debate seems to be whether having a doctorate makes a therapist more competent over Masters level therapists. It doesn't in most cases, but experience certainly does. But on an educational level, pschologists are not better trained or equipped to handle "deeper" issues than other Ts. What dictates that competence (beyond a license) is the amount of experience a T has and with what population if you want a specialization.

All licensed Ts can diagnose as well- even non PhDs. In fact they have to if clients are using insurance. The only time you need a phD to diagnose is if you are going for psych testing. That can only be done by a doctorate. It isn't necessary for diagnosis per se but is if you are applying for disability or for services for that specific issue (like autism or ADHD) where testing and documentation are needed. The therapy provided for people with these issues is often provided by Ts who are not PhDs, however.