I am not so much concerned for your childs sexual safety, but for the fact that these poor two young children and being made to sleep in an arrangement that is making them very unhappy with regard to their bodily privacy.
I dont want to exaggerate the word really, but as far as I am concerned since there is no need to put them in this position it is, to me anyway, a form o fabuse.
OP, why are you implying that you have two choices, do nothing or stop contact? Stopping contact is not appropriate just yet as it will go against you in the future.
You need to tell exh what you have already been advised, face to face at first ie you asked nspcc anonymously etc etc.
If he still ignores then you email him and say you are very sorry to email but you have raised your concerns face to face and he has not acted upon them, and that this is what nspcc says blah blah.
Next step you tell him face to face that if he doesnt take action you will follow nspcc advice.
Then if he doesnt act you email him again saying sorry to be formal, but you have told him face to face and now you are telling him by email.
Then you contact childrens services and ask for their advice about the situation - the problem is not your dds risk of being abused, its her father ignoring the wishes of a 5yr old and a 10 yr old with regard to bodily privacy (mention morning erections). Tell them the steps you have taken and show them the evidence.
Then do what they tell you to do. If they suggest you stop contact immediately ask them to confirm their advice by letter or email as you are concerned re how it would look in court if exh tried to get custody in the future.
It is really very simple, but I suspect I may have wasted the last 5 minutes of my life typing this!!!