(Recasts first paragraph; adds settlement details, Bank of America statement, byline)

By Jonathan Stempel

NEW YORK, June 2 (Reuters) - Bank of America Corp's Merrill Lynch unit will pay more than $15.2 million to thousands of customers who it steered automatically into buying costlier mutual fund shares than they were eligible for, a U.S. regulator said on Thursday.

The Financial Industry Regulatory Authority said Merrill did not admit or deny wrongdoing in agreeing to the payout, which includes restitution and interest. No fine was imposed.

FINRA said Merrill had maintained an automated system designed to limit customers' purchases of Class C mutual fund shares when cheaper Class A shares were available.

Class A shares carry front-end sales charges. Class C shares typically do not, but impose higher fees and expenses that over longer periods of time can make them more expensive to own.

FINRA said Merrill's system often failed to limit purchases of Class C shares, causing customers to pay $13.4 million of unnecessary fees and expenses from January 2015 to January 2021.

As part of the settlement, Merrill agreed to convert customers' Class C shares to Class A shares where appropriate.

FINRA said the lack of a fine reflected Merrill's "extraordinary cooperation," including its hiring an outside consultant to find affected customers and establishment of a remediation plan.

Merrill Wealth Management ended March with $3.12 trillion of client balances.

Bank of America said in a statement that it "proactively detected" the problem, reported it to FINRA, and implemented enhancements to address it.

FINRA is an independent nonprofit that recently regulated about 3,400 securities firms. (Reporting by Jonathan Stempel in New York; editing by Jonathan Oatis)