A group representing non-profit credit counselling agencies across Canada says the country's banks are dismantling a single, unified donation program and moving instead to a one-on-one system that could mean more red tape and increased costs for the group.

Credit Counselling Canada, or CCC, said the current program, where banks collectively donate money to help it offer counselling and education programs for consumers, is being scrapped at the end of October.

CCC director Scott Hannah said once the program ends it will have to negotiate separate donation agreements with each of the 19 banks and other financial institutions it currently deals with in Canada.

"It's disappointing," Hannah said of the upcoming change.

"Before, we had a national agreement where all banks agreed to the same conditions and standards. Now, they will have to negotiate with our national association on a one-on-one basis."

The program has been administered by the Canadian Bankers Association, which will step away from that role altogether as of Nov. 1.

Hannah is concerned the new system will mean a lot more administration work for his non-profit organization, take more time and cost more to handle.

What's more, there is a concern that the CCC could receive fewer funds overall.

He said the association is currently talking to the banks about how to go forward with the new system, and how it will work.

"Our hope is that we are going to have a similar type of agreement that will allow our members to continue on with their good work both proactively and from a rehabilitation standpoint," Hannah said.

"Right now, our existing funding agreement allows us to do that."

Bad timing

CCC represents nine non-profit credit counselling agencies, each with offices throughout Canada.

The timing is seen to be particularly bad given the recession, rising unemployment and increased bankruptcy rates among Canadians.

Personal bankruptcies rose 54.3 per cent in June compared with the same month last year, to a total of 13,792, according to the federal Office of the Superintendent of Bankruptcy. The overall rate for personal and business bankruptcies was a 51.1 per cent rise year-over-year, or 14,418 insolvencies.

"Our goal is to be able to maintain a level of support that meets the needs of Canadians, especially in these challenging times," Hannah said.

He said he hopes a new system could potentially mean increased funding to compensate for both the higher costs to run the programs, as well as the greater need to help Canadians who are struggling financially during the current economic downturn.

The Canadian Bankers Association said banks have donated to the CCC for the past 10 years according to its national donation policy.

In 2007, that amounted to $12 million of funding to 28 not-for-profit credit counselling agencies across the country, bankers association spokeswoman Maura Drew-Lytle said.

She said the program will change from "industry policy to individual bank policies" arranged with the credit counselling industry.

"The CBA will no longer be involved in making these arrangements," she said in an email.

Drew-Lytle said banks will continue to support credit counselling agencies, "but have come to the view that a one-size-fits-all policy through the CBA may not be the best way to provide that support."

She said the new approach will give the banks more flexibility to offer funding based on their individual business priorities.

"While the method of providing funding is changing, the banks' commitment to credit counselling and financial literacy is not," she said.

Individual banks contacted refused to comment on the upcoming change, or were not immediately available.