The most common and most likely answer to this crossword clue is the 7 plus 7 letter word FUNERAL PARLOUR
I've seen this crossword clue in The Daily Telegraph
F
U
N
E
R
A
L
P
A
R
L
O
U
R
More clues leading to the result FUNERAL PARLOUR
Buddy explains!
The straight part
We know that "Place requiring stiff observance?" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case place requiring stiff observance? = funeral parlour.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.