"Counselling" is usually just discussing the student's shortcomings in a given area, with possible solutions to improve, and an outcome if the shortcomings aren't resolved: "Pte Bloggins, your weapon is dirty. You have been shown how to clean it in class, and if you need assistance ask a fellow soldier or a DS. If you do not make an improvement in the level of cleanliness, you will be placed on Verbal/Written/Final Warning. Do you understand?"
The Red Chit system is still in effect (in most training centres as far as I know), but not to the ridculous level where it had been in the past. It had turned into a joke, and had lost all effectiveness. The "chit" is just another tool in the belt of the instructors to record where a student needs to improve, and if there is no improvement, it is a record of that failing, and the paperwork can begin to remove them from the system. The way it had been abused in the past, people didn't "fear" the chits, and in fact wore them like a badge of honour. In other words, they were a hollow threat. If used effectively, they can help a student see where they need to improve, and as well, can assist the course staff in seeing where student's need help. An example of this would be where the majority of the soldiers in a section get chitted for not cleaning their weapons properly. The DS could put 2 and 2 together and realize that that section was probably never taught how to properly clean weapons, and require remedial training.
Al