It is usually believed that this approach uses only biblical and Christian principles and does not use psychology. It seems to be the most popular approach within The Scripture Against Psychology aka "Nothing Buttery" view. However, reading his book Competent to Counsel: Introduction to Nouthetic Counseling (published in 1970) where he introduces his approach, I found out that his approach has much to do with psychology. In this book, Adams criticizes Freud and Rogers, but admires ideas of secular psychologist Dr. Orval Hobart Mowrer, and actually admits that he used Mowrer's ideas for his nouthethic counseling.
Adams writes in Introduction to Competent to Counsel: Introduction to Nouthetic Counseling (pp. xiv-xviii):
... I remembered the name of a man whose works a Christian psychologist had once mentioned to me. That man was O. Hobart Mowrer.
I read some of Mowrer's works, including The Crisis in Psychiatry and Religion, and The New Group Therapy, which he had just published. These books astounded me. Mowrer had gone far beyond my own thinking. He was flatly challenging the very existence of institutionalized psychiatry. He stated outrightly that he believed that current psychiatric dogmas were false. He cited evidence to demonstrate that psychiatry largely had failed. I corresponded with Mowrer over certain points. In that correspondence Mowrer invited me to participate in his Eli Lilly Fellowship program at the University of Illinois, where he is Research Professor of Psychology. I went to the University of Illinois, where I worked under Mowrer during the summer session. That was an unforgettable experience for which I shall always be grateful. Getting away from all else and concentrating on the question of counseling for two months was exactly what I needed.
During the summer of 1965 we worked in two state mental institutions, one at Kankakee, Illinois, and the other at Galesburg, Illinois. In these two mental institutions, we conducted group therapy with Mowrer for seven hours a day. Along with five others, I flew with him, drove with him, ate with him, counseled with him and argued with him five days a week. I learned much during that time, and while today I certainly would not classify myself as a member of Mowrer's school, I feel that the summer program was a turning point in my thinking. There in those mental institutions, under Mowrer's methods, we began to see people labeled "neurotic, psychoneurotic, and psychotic" (people of all stripes) helped by confessing deviant behavior and assuming personal responsibility for it. Mowrer's emphasis upon responsibility was central. Mowrer urged people to "confess" their wrongs (not to God, but) to others whom they had wronged and to make restitution wherever possible. Mowrer is not a Christian. He is not even a theist, and we debated the issue of humanism all summer.
During that time I made a study of the principal biblical data on the subject of counseling, which special reference to what Scripture says about conscience. That summer's experience left me with some large convictions. First, I discovered why the large majority of people in mental institutions are there. Spending so much time with such persons afforded the opportunity to get to know and understand them. Apart from those who had organic problems, like brain damage, the people I met in the two institutions in Illinois were there because of their own failure to meet life's problems. To put it simply, they were there because of their unforgiven and unaltered sinful behavior. Secondly, the whole experience drove me back to the Bible to ask once again, "What do the Scriptures say about such people and the solution to their problems?"
Reading Mowrer's book The Crisis in Psychiatry and Religion, as I said, was an earth-shaking experience. In this book Mowrer, a noted research psychologist who had been honored with the Presidency of the American Psychological Association for his breakthrough in learning theory, challenged the entire field of psychiatry, declaring it a failure, and sought to refute its fundamental Freudian presuppositions. Boldly he threw down the gauntlet to conservative Christians as well. He asked: "Has Evangelical religion sold its birthright for a mess of psychological pottage?"
In Crisis, Mowrer particularly opposed the Medical Model from which the concept of mental illness was derived. He showed how this model removed responsibility from the counselee. Since one is not considered blameworthy for catching Asian Flu, his family treats him with sympathetic understanding, and others make allowances for him. This is because they know he can't help his sickness. He was invaded from without. Moreover, he must helplessly rely on experts to help him get well. Mowrer rightly maintained that the Medical Model took away the sense of personal responsibility. As a result, psychotherapy became a search into the past to find others (parents, the church, society, grandmother) on whom to place the blame. Therapy consists of siding against the too-strict Super-ego (conscience) which these culprits have socialized into the poor sick victim.
In contrast, Mowrer antithetically proposed a Moral Model of responsibility. He said that the "patient's" problems are moral, not medical. He suffers from real guilt, not guilt feelings (false guilt). The basic irregularity is not emotional, but behavioral. He is not a victim of his conscience, but a violator of it. He must stop blaming others and accept responsibility for his own poor behavior. Problems may be solved, not by ventilation of feelings, but rather by confession of sin.
From my protracted involvement with the inmates of the mental institutions at Kankakee and Galesburg, I was convinced that most of them were there, as I said, not because they were sick, but because they were sinful. In counseling sessions, we discovered with astonishing consistency that the main problems people were having were of their own making. Others (grandmother, et al.) were not their problem; they themselves were their own worst enemies. Some had written bad checks, some had become entangled in the consequences of immorality, others had cheated on income tax, and so on. Many had fled to the institution to escape the consequences of their wrong doing. A number had sought to avoid the responsibility of difficult decisions. We also saw evidence of dramatic recovery when people straightened out these matters. Humanistic as his methods were, Mowrer clearly demonstrated that even his approach could achieve in a few weeks what in many cases psychotherapy had been unable to do in years.
I came home deeply indebted to Mowrer for indirectly driving me to a conclusion that I as a Christian minister should have known all along, namely, that many of the "mentally ill" are people who can be helped by the ministry of God's Word. I have been trying to do so ever since.
So, this idea that all the people who have mental disorders and various psychological problems are responsible for their problems comes not from the Bible, but from secular psychology. In fact, it seems that Adams' approach is better than Mowrer's because he emphasizes that counselees should be treated with love and sympathy, while he never mentioned that Mowrer treated his clients this way.
Well, maybe this approach is currently more popular among Christian ministers than among secular psychologists, but the fact is that it comes from secular psychology and not from the Bible. In fact, there are some biblical objections to this approach.
The Bible does not make such emphasis on admonition as Adams does. The Bible speaks not only about admonishing, but also about comforting one another. 1 Thessalonians 5:14 (NASB): "We urge you, brethren, admonish the unruly, encourage the fainthearted, help the weak, be patient with everyone." The Bible often encourages Christians to sympathize with one another, for example, Rom. 12:15 (NIV): "Rejoice with those who rejoice; mourn with those who mourn."
In chapter 9 of Effective Biblical Counseling, Larry Crabb writes:
Jay Adams has become widely known for his confrontational approach. In his insistence that his model is the only truly biblical one, he argues that the Greek word noutheteo, which includes the idea of verbal, directive, instructive confrontation, provides the central concept of Christian counseling. In chapter 1 I referred to Colossians 1:28 where Paul states that he "nouthetically confronts" people in an effort to promote their maturity. Although I agree with Adams that Christian maturity is the central goal of biblical counseling, I do not think that the strategy of confrontation exhausts all possible ways to achieve the goal. Certainly there are times when strong firm confrontation is right and necessary. But there are other times when gentle support, encouragement, concerned listening, exploration of inner dynamics, reflection, clarification, and acceptance of feelings are desirable.
A confrontational model is not nearly broad enough to cover all the ingredients of effective Christian counseling. Paul told the Thessalonians to nouthetically confront those who were disorderly in their actions, people who were stubbornly resisting their responsibilities. But he also instructed them to comfort people who were despondent or fainthearted. The Greek word for comfort is paramutheo and literally means to "speak close." It was used to describe an emotional expression of support and love without a hint of confrontational rebuke. To harshly confront a fainthearted person not only would be cruel but also positively harmful. Paul also advised them to hold strongly onto those who were weak. The thought seems to be that some people need to borrow from another's strength on occasion. Other encouragements to bear each other's burdens support the idea that the local body of believers is to be an interdependent fellowship including confrontation, supportive encouragement, strong assistance, and likely a host of other behaviors. Counseling then includes far more than confrontation and sometimes may not include confrontation at all. John Carter suggests that the word parakaleo and its cognate  paraklesis offer a "much more adequate model of counseling (than noutheteo) from a Biblical perspective." He points out that, whereas noutheteo and its cognate occur only thirteen times in the New Testament, parakaleo or one of its forms is translated (in the King James Version) twenty-nine times as "comfort," twenty-seven times as "exhort," fourteen times as "consolation," and forty-three times as "beseech." He also makes the more important point that paraklesis is listed specifically as a gift to the church (Rom. 12:8). Vine says that parakaleo denotes "to call to one's side, hence, to call to one's aid. It is used for every kind of calling to a person which is meant to produce a particular effort, hence, with various meanings such as comfort, exhort, desire, call for ... (and) beseech."
I agree with Crabb's criticism of Adams' approach here. Blaming all the people for all their problems, telling them that they need to repent, confess their sins, and change their behavior may seriously harm them, and the Bible does not encourage this. It encourages to comfort and support people who have problems, but this side is lacking in Adams' model.
I guess that abusive pastors may use Adams' ideas in order to blame people for all their problems. However, the thing is that this idea comes not from the Bible (as many people wrongly believe). This idea comes from secular psychology. Many ex-members of Bible-based cults and abusive churches tend to believe that Christianity is harmful and secular psychology is safe. But it is not really so. And, as I mentioned, Adams' approach seems to be much more compassionate than Mowrer's approach.
Another problem with Adams' approach is that he considers that there are two sources for mental problems: organic problems and personal sins. He states that the Bible does not say that there is any third source. Well, the Bible does not clearly says about organic mental disorders or about mental disorders that come from personal sins. However, the Bible does say much about demon possession that may cause conditions very similar to mental disorders. Adams does not mention demon possession at all.
Some Christians tend to pay too much attention to Satan and demons and blame them for all their sins (thus removing their own responsibility). This is one extreme. Adams seems to neglect demon activity completely. I believe that this is another extreme. The Bible not only speaks about demon possession (when a person is completely controlled by a demon or demons), but also about Christians' war against Satan and demons (in Ephesians 6:10-18 and some other passages). In chapter 5 of Christian Counseling A Comprehensive Guide, clinical psychologist Dr. Gary R. Collins mentions several possible reasons for mental problems, including organic problems, sins, demons, etc. Although he believes that demon possession is very rare, he does not deny it completely. I think his approach is more biblical. It seems that Adams' idea that there are only two sources of mental problems (organic problems and personal wrongdoings) comes from Mowrer and not from the Bible. It would be hard to expect that Mowrer believed in demons if he did not believe in God. Well, if a person is demon-possessed, of course, he or she should not be blamed for all their problems (though some people may intentionally invite demons). I guess it may be one of the reasons why Adams does not speak about a possibility of demon possession.
Then, the third problem is that Adams selects only the biblical passages that support his ideas and neglects those that do not match his ideas. For example, writing about biblical counseling, he quotes only the verses that mention admonition (in Greek "nouthesis") and rejects those that mention comfort, consolation, etc. In the same way, he "proves" that the cause of depression is always sin, taking three psalms (32, 38, and 51) where Psalmist sinned, experienced depression, confessed, and rejoiced. However, there are many more psalms where Psalmist experienced depression because he was oppressed and persecuted by his enemies. Adams does not mention them at all, obviously, because they do not match his theory. Actually, the only conclusion that can be made after reading and studying Psalms is that depression sometimes may be caused by unconfessed sin, but in many cases, it is caused by other reasons, such as ill-treatment or wrongdoings of other people. This conclusion does not match Adams' theory that is based on Mowrer's moral model of responsibility rather than on the Bible. So, he does not mention these psalms at all. This point is probably quite important for ex-members of cults who suffer from depression. Those who use Adams' model of counseling would probably tell ex-members of cults that if they experience depression, it is because of their own sins. However, the Bible clearly says that in many cases (probably, in most cases) depression is caused by other reasons, such as other people;s wrongdoings toward them. In other words, if ex-cult members suffer from depression, it is not their fault, but most likely it is the cult leaders' fault.
In conclusion, Adams' model of nouthetic counseling is based on Mowrer's ideas and contradicts the Bible.