Although I'm not actually sure how much the watchdog is "warning" here, despite the article claiming it is. The language from the report is the following:
6.18. In each of these cases the motive of the app developer/ lobbyist/The report doesn't make any recommendations or suggest any changes to the law, it seems to consider that it is good that this could be considered Section 3 "hostile activity". This later part about Schedule 3 investigations also makes this clear:
The Joint Committee on Human Rights was of the view that there was an even greater risk of arbitrary use of Schedule 3 than of Schedule 7, owing to the broader and more ambiguous definition of “hostile activity” (than of terrorism). I would develop the point further:
• For Schedule 7, the examining officer must at least have in mind the possibility that the examined person is morally blameworthy. That arises from the statutory question: whether the individual is a person “…is or has been concerned in the commission, preparation or instigation of acts of terrorism”
• By contrast, under Schedule 3 a lawful examination may take place, with all the intrusion and inconvenience attached, of an individual for whom the question of moral fault does not arise at all.
6.22. Having said this, I am not yet able to draw any practical conclusions from this conceptual distinction. Firstly, most examinations are likely to be directed at the issue of witting or witting participation, which incidentally puts a premium on human as well as digital interrogation. Secondly, the possibility that an examinee is in fact entirely innocent also arises under Schedule 7. I will therefore keep under review whether this needs to be reflected in the Code of Practice, but make no recommendation at this stage.
The language changes here are slight (claims -> warns) and includes more context about the reason this watchdog is speaking out (current debates around the Counter-Terrorism and Border Security Act, new implementation of the National Security Act), using language from the first 4 paragraphs (may be considered, could be considered, stark warning, report warns, etc).
You could also leave out the specific names of the acts—they're not super helpful to me as a non-UK news consumer, but I suspect they might be more crucial to someone who's tapped into the UK political news cycle:
"Creating apps like Signal could be considered 'hostile activities' under new laws, UK watchdog warns"