Maybe the policy against providing a personal reference, is to prevent former employees who didn't leave on the best of terms (whether fired or not), from gaining positive feedback from anyone in the company. Thus circumventing the "normal" channels for obtaining a reference?
Sort of like when I left my last employer. We had a bit of a personality clash, but I worked well with someone else in the office. I could have completely given a new employer, the person's name I worked with at my last job...rather than my boss's name...to get what I knew would be a positive reference. Rather than relying on my former boss's "mood."
However, it really is illegal for a former employer to say anything but "yes, she worked here." (Unless the employee was terminated for doing something illegal.)
When looking for a new job, I didn't even mention that I'd worked for former employer. Under the circumstances, it was a situation best "forgotten" about.
Though I worked with the person I "would" have used as a reference, before...I never asked her once I left the latest place we'd worked together. (Not that she wouldn't have given me a glowing report. I just didn't want anyone digging deeper, or wondering why I didn't use my former boss instead.)