The function stream-element-type is implemented as a generic function. Depending on the stream, a method should be defined for this generic function that returns the element type of the stream.
Methods must be implemented for all subclasses of buffered-stream. Typically for character streams, the implementation can return the array-element-type of the buffer.
For the class fundamental-character-stream a default method is provided which returns character. A method should be defined for stream classes based on the fundamental-binary-stream class.
There is an example in Recognizing the stream element type.
LispWorks User Guide and Reference Manual - 20 Sep 2017