Hundreds of Australians have raised concerns with the financial services royal commission as it puts the spotlight on the big banks over mortgages, car loans, credit cards and so-called junk add-on insurance.

A number of banks and financial services providers have acknowledged aspects of their conduct has been unacceptable or caused detriment to consumers in Australia's $1.6 trillion home loan market, the inquiry heard.

The banks have refunded almost $250 million to about 540,000 home loan customers since July 2010, senior counsel assisting the commission Rowena Orr QC said on Tuesday.

Most of that related to account administration and processing errors such as failing to link offset accounts to mortgages or apply the correct interest rate, but there were also cases of fraudulent documentation and breaches of responsible lending laws.

About $128 million has been paid in remediation over add-on insurance products, the bulk connected to car loans taken out by more than 212,000 consumers.

Added together, the remediation connected to mortgages, car loans, credit cards and add-on insurance amounts to about $480 million since July 2010, figures provided by the Australian Securities and Investments Commission show.

The spotlight was on the National Australia Bank on day one of the royal commission's consumer lending public hearing, but the other three big four banks will also feature prominently over the next fortnight.

Ms Orr said the types of misconduct and conduct falling below community standards and expectations are not unique to ANZ, Westpac, NAB and Commonwealth Bank or the other two organisations the subject of case studies - CBA's Aussie Home Loans subsidiary and Citibank.

She said the commission received acknowledgements of similar misconduct and conduct below community expectations from a number of other banks and broking entities.

Ms Orr said in about 1900 submissions to the inquiry, some Australians have expressed concerns that financial service entities and brokers have falsified documents to obscure customers' true circumstances to obtain a bigger loan.

"Their submissions relay concerns that the consumer is then left in a precarious position of paying off a loan that should not have been approved for that consumer in the first place," she said.

Financial Rights Legal Centre co-ordinator Karen Cox said at the worse end of the scale consumers' details were being "massaged" or completely falsified by mortgage brokers but there were even more instances of outright falsified loan applications in the car finance market.

Australian Associated Press