The most common and most likely answer to this crossword clue is the 9 plus 6 letter word TRAFALGAR SQUARE
I've seen this crossword clue in The Daily Telegraph
T
R
A
F
A
L
G
A
R
S
Q
U
A
R
E
Buddy explains!
The straight part
We know that "Capital place where an old serviceman is always looked up to" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case capital place where an old serviceman is always looked up to = trafalgar square.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.