National Australia Bank denies charging customers for advice they never received is dishonest, arguing it "accidentally" kept the money.

NAB CEO Andrew Thorburn admits the bank has taken too long to compensate customers, after arguing with the corporate regulator about how to work out how much it had to repay.

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

"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."

NAB has had a number of fees-for-no-service issues, including charging the estates of more than 4000 dead superannuation customers $3 million.

Another involved customers who were transferred to its MLC Direct business continuing to be charged ongoing fees when they no longer had an adviser, an issue that came to light after complaints in 2015.

Mr Thorburn said staff failed to connect the dots.

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

He said the issue was 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: "This money fell into the pocket of NAB accidentally."

Mr Thorburn said he could not disagree.

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

NAB has clashed with the Australian Securities and Investments Commission over the remediation for customers charged fees for no service, with the regulator becoming "cranky" - as one NAB executive put it - after rejecting numerous proposals from the bank.

Senior counsel assisting the commission Michael Hodge QC said it was absurd for NAB to suggest it would not simply refund the fees to some customers on the basis that it could have kept those people on commission-paying arrangements.

Mr Thorburn said absurd was Mr Hodge's word.

"I think when you look back on it, I acknowledge we got this wrong," he said.

"We had the right intent but we were looking at it too narrowly and technically."

Mr Hodge suggested the real problem was that agreeing to an acceptable methodology with ASIC would cost the business more than it wanted to pay.

Mr Thorburn said he did not believe that was the reason, but it was a factor.

Mr Thorburn denied trying to blame the bank's approach on fees for no service on a senior executive who has since been made redundant, its former consumer and wealth boss Andrew Hagger.

NAB and ASIC have now agreed on the remediation method for clients of NAB Financial Planning.

But it is still working out how much it will have to repay from the $600 million in ongoing service fees charged over a six-year period by authorised representatives of its four advice licensees.

ASIC has taken NAB to court over a separate fees-for-no-service issue involving its $100 million charged to hundreds of thousands of superannuation customers.