The most common and most likely answer to this crossword clue is the 5 letter word PENAL
I've seen this crossword clue in Financial Times
P
E
N
A
L
More clues leading to the result PENAL
- Very severe scheme before end of sentence
- Writer and American gangster seen to be punishable
- Disciplinary panel, when assembled
- Vindictive correspondent scrapping second page
- Disciplinary panel assembled
- Parking on country road put back as a punishment?
- Corrective pressure on the way up
- Road up after parking — that’s punitive
- US prison’s always short of methods of punishment
- Corrective action finally taken by ring
Buddy explains!

The straight part
We know that "Extremely severe" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case extremely severe = penal.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.
What does PENAL mean?
PENAL adjective- Of or relating to punishment.
- Subject to punishment; punishable.
- Serving as a place of punishment.
- Exorbitant.