Australia's largest lender collected fees from customers it knew had died, a major inquiry has heard.

Commonwealth Bank of Australia (CBA) told a public hearing that some of its financial planners had billed services to deceased clients, wrote BBC.

In one case, an adviser collected fees from a former client for more than a decade.

Australia is holding a royal commission - its top form of public inquiry - into the nation's financial institutions.

Prime Minister Malcolm Turnbull ordered the inquiry last year following a series of scandals involving financial misconduct.

CBA told a hearing on Wednesday that it had regularly collected fees from customers for services that were not delivered.

On Thursday, bank executive Marianne Perkovic said that practice extended to dead customers.

One adviser knew a client had died in 2004 but continued to collect monthly fees until 2015, the inquiry heard.

The commission was told that financial advisers involved in misconduct had been penalized with warnings by the bank.

CBA has previously faced scrutiny for alleged breaches of anti-money laundering laws, and for providing inappropriate financial advice.