The Norton Rose Group has recently published its fifth survey tracking market views on the global financial crisis. The subject of the latest survey – the consequences of Iceland's actions in dealing with its financial crisis – is the first country-specific survey we have carried out.

The survey sought the views of international financial institutions about Iceland's handling of its financial crisis. The respondents were mainly large, mainstream European banks.

A quarter had market values of EUR2 billion to EUR10 billion with almost half capitalised at EUR10 billion to EUR20 billion. They represent institutions who invested savers' money in what was believed to be a successful western economy closely affiliated to the European Union.

The survey finds a collapse of trust in Iceland among international investors at a time when some commentators are speaking of Iceland's application to join the EU being "fast-tracked".

There is near unanimity (95%) among respondents that the Icelandic authorities did not respond properly to the country's crisis. Respondents criticised lack of disclosure and dialogue with creditors and long delays in the process.

Almost all respondents (98%) say Iceland has not treated international creditors fairly, the most condemnatory verdict on any of the questions. Respondents point to lack of transparency and inclusion, arbitrary treatment, self-interested actions and long-term damage to Iceland's credibility.

Key to the country's loss of credibility is investors' belief (74%) that Iceland has failed to comply with laws by making retroactive changes to its own legislation and flouting international conventions and practices governing the treatment of creditors. The country added to this lack of trust through what investors see as a lack of transparency (77%) or dialogue (81%).

Investors are now ready to take legal action to secure a fairer settlement for international creditors, with 93% of respondents saying they would consider doing so.

Almost 90% of respondents see no recovery in the country's financial sector for at least two years. No one expects a quick fix, reflecting investors' complete loss of faith in Iceland's financial system and institutions.

There is a complete collapse of confidence in Iceland's institutions, with lack of faith in the government (91%) and lack of trust in the financial regulator (97%).

Investors see Iceland's problems as largely of its own making rather than as a direct result of the international financial crisis. Some 86% point to lack of domestic controls, and more than a quarter blame a home-grown financial crisis or simple greed. As one investor says, "The global crisis only revealed what was wrong with Iceland."

This loss of trust threatens Iceland's access to the future foreign investment it needs to get back on its feet. More than 90% of respondents, who already hold a stake in Iceland, say they are unlikely or highly unlikely to invest again. This reflects the belief among international creditors that Iceland has failed to give fair and equitable treatment to international investors and has refused to play by the international rules expected of trusted economies.

Iceland is negotiating to join the EU but three-quarters of respondents do not believe it is ready to do so. The sentiment suggested by the survey from international investors is that Iceland is isolating itself. The country needs to change that view if it is to restore faith in its financial system and economy.

For more information on the survey, click here.