From www.smsfadviser.com: The Australian Financial Complaints Authority (AFCA) has outlined its use of the “but for” test to determine compensation claims related to financial advice concerning SMSFs.

This test assesses losses by considering what would have happened if the inappropriate advice had not been given, using methods like the “no-transaction” counterfactual and market benchmarks for comparison.

AFCA aims to ensure fair compensation that reflects both potential rewards and market risks, preventing over-compensation based on short-term fluctuations.