A Psychologist or anyone for that matter can offer a diagnosis as a diagnosis is only an opinion. However, a Psychologist should not be giving medication advice as this falls well outside the typical training a Psychologist receives. To know whether it is illegal (a criminal offense) you would need to speak with a lawyer, however Psychologists are usually bound by a code of ethics and these usually stipulate that a Psychologist should not work outside or beyond their skill & knowledge base. So, if you check with the authority they are registered with (probably the local state psychological board) you will able to confirm whether they have broken ethical guidelines. Most authorities provide contact services for reporting or inquiring abut potential breaches of conduct and they will be able to give you specific advice relevant to the jurisdiction this person works in. Psychology boards can usually take disciplinary action where appropriate.
I work within Psychiatry and have a neurophysiology degree in addition to my Psychological qualifications....and I am always very careful never to give any patient direction on any medication whatsoever. I often discuss what I know about medications and how they are used within Psychiatry but I never ever instruct a patient regarding their own use of medication. I refer them to their Psychiatrist or Doctor for specific advice and it sounds like that is what this person should have done.
I hope this has been of some help. Please let me know if you have further questions or would like me to clarify or expand upon any part of my answer. If not....I wish you the best of luck.