My experience was similar to yours - see if this link works:
https://forum.hearingtracker.com/t/phonak-making-s-sound-into-sh-sound-any-ideas/98747/49
Got it turned off and Ss no longer sound like Shs which is good, but if it might help speech discrimination maybe I bailed too early. Was quite disconcerting and un-natural sounding.
Gave back the Phonak, trialing a new ReSound which is no better than my three-year-old ReSound and will probably give that back too, and wait (try to stay breathing/living) another year to see what comes around.