The most common and most likely answer to this crossword clue is the 2 plus 3 plus 4 letter word UP THE POLE
I've seen this crossword clue in The Daily Telegraph
U
P
T
H
E
P
O
L
E
More clues leading to the result UP THE POLE
Buddy explains!
The straight part
We know that "Mad/place for colours" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case mad/place for colours = up the pole.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.