Pardon set many loose! (7)
I believe the answer is:
amnesty
'pardon' is the definition.
(I know that amnesty is a kind of pardon)
'set many loose' is the wordplay.
'loose' indicates anagramming the letters (letters are loosened from their original positions).
'set'+'many'='setmany'
'setmany' with letters rearranged gives 'AMNESTY'.
(Other definitions for amnesty that I've seen before include "suspension of law" , "A general political pardon, perhaps for tax defaulters" , "Men stay (anag.)" , "General pardon for crimes against the state" , "A general pardon as for rebels (7)" .)