National Australia Bank argues that charging customers for advice they never received is wrong - but not dishonest - and the bank "accidentally" kept the money.

NAB CEO Andrew Thorburn said staff failed to connect the dots when customers transferred to its MLC Direct business continued to be charged ongoing fees when they no longer had an adviser.

Appearing at the banking royal commission, Thorburn did not accept that keeping fees for a service NAB did not provide was dishonest.

andrew thorburn nab royal commission misconduct

NAB chief executive Andrew Thorburn

"It's wrong. It's absolutely wrong," he said on Monday.

"Dishonesty would go to to the intent and I don't feel it was dishonest in that respect."

Thorburn said the first the bank knew about the problem was when customers complained in 2015.

It was an operational error and oversight, he said.

"That's where the mistake was made, but it wasn't 'let's do it and see if we can get away with it'."

Thorburn said NAB did not have sufficient controls in place to ensure the ongoing advice service fee was turned off.

Royal commissioner Kenneth Hayne QC suggested another way of putting the argument was that "this money fell into the pocket of NAB accidentally".

Thorburn said he could not disagree.

"It wasn't intended to be ours but it became ours, yes."

NAB has previously admitted charging more than 4000 dead superannuation customers $3 million in fees, among issues related to advice fees being deducted from super members' accounts when no service was provided.

NAB only discovered that issue this year, after the Commonwealth Bank admitted charging deceased estates fees.

The inquiry has previously heard the corporate regulator believed NAB was out of step with some of its major peers over remediation for the $1 billion, industry-wide fees-for-no-service problem.

NAB is the first company to face court action, over charging hundreds of thousands of superannuation customers $100 million in fees for services they did not receive.

The royal commission is deliberately not asking questions about that specific issue because it is before the courts.

Thorburn said he was wrong to oppose the banking royal commission.

"The royal commission has given us real cases of real customers, where we've made terrible mistakes," he said.

"When you read the case studies, you say this is so upsetting and so damning, what went wrong?"

Thorburn said the banks can be criticised for having put profits before people and have focused too much on the short term.

"Focusing too much on growth, short-term growth that's not really sustainable and a sales culture was introduced, not just in our bank, in the system," he said.

"I think that created wrong outcomes as well, unintended consequences."